10 Jun Remodeling Is More Important Than Ever When Selling A Home
In the mid-2000s HGTV started broadcasting a seemingly endless variety of remodeling shows. It’s been a while, but remodeling is even more popular today. One reason for this is human nature. Let’s be honest, everyone loves the satisfaction of a good before and after picture. The picture above is from one of our own agent’s, Stefan Petrashek, latest remodel. You can see the complete remodel via virtual tour here.
Another reason is the Real Estate crash which left a plethora of homes in poor condition and an opening in the flipping market. The current reason is the average age of homes is getting older and older. Neighborhood Scout Lists the average age of homes in Minnesota in the 1970-1999 range. These are Statewide statistics and would vary wildly in an area like Lakeville which has had a new construction boom in recent years. Still, the numbers show a huge divide between the newer houses and 20-year old homes.
In a 2019 “Improving America’s Housing” report from Harvard University’s Joint Center for Housing Studies states spending on remodeling and repairing owner-occupied and rental properties reached $425 billion in 2017. This was a record-setting high. These numbers are Countrywide but accurately represent Minnesota. The rise in remodeling is directly linked to the fall in new construction. However, Minnesota saw a recovery in housing construction a few years back.
The Star Tribune says in 2017 new construction returned to its’ before crash average and plateaued there. They continue by stating 60% of this new construction is multi-family buildings. This leaves only 40% of the market devoted to single-family homes. In the single-family category, things have slowed down significantly. This is due to the rising cost of building houses which cause high priced homes that don’t compete well with the market’s current inventory.
So, why is remodeling so important?
Aging homes, costly new construction, the healthy economy, and maybe a little bit of HGTV hype are leading to remodeling’s growing importance in today’s market. With so many updated homes, the trend becomes the expectation. No matter the inventory, the majority of buyers will always prefer a move in ready home.
Sellers need to take a hard look at their budget and try to make a few updates so they can sell at the top of their home’s price range. Of course, sometimes remodeling doesn’t make financial sense. If that’s the case, it’s time to accept the property’s final sale price will need to reflect this. But remember, more remodeling and updating doesn’t necessarily increase profit returns. Try to stick to key elements like flooring, bathrooms and the kitchen. There’s a method to the madness.
Instead of outlining the best ways to prioritize updates, repairs, and remodels here, read my other posts on the topic:
If you have any questions, please let me know, I’m always happy to help. You can give me a call at 612-889-6496 or send an email to [email protected]