The Truth About Home Renovations

Homeowners are spending more than they did last year on renovations, but the “trophies” of the housing boom – granite countertops, specialized flooring – have been replaced by home improvements, such as insulation.

During the housing boom, homeowners saw huge returns for their vast kitchen expansions, master-suite additions and bonus room additions. But in the current economy, many additions and improvements are bringing lower returns than they once did. One can blame lower demand for trade-up housing, or perhaps tight financing. And stiffer home-appraisal rules mean fewer banks are lending extra to buy or remodel homes with features out of line with comparable properties nearby.

So what is best to do in this slower housing market?  The best projects save owners money on energy and maintenance expenses. Having just recently attended a “green” seminar, I can tell you this is the way of the future. One should invest in energy-efficient windows, roofing and doors. For instance, energy-efficient steel entry doors can return more than 100% of their average $1,172.00 cost, helping a house make a good first impression and reducing energy bills.

Some energy-conservation projects bring more return because they are cheaper, due to a slow economy and thanks to retailer discounts, federal tax credits and incentives, according to a survey at Remodelormove.com. Most qualifying projects that were finished in 2009 or 2010 are eligible for a federal tax credit of 30% of cost, up to a maximum of $1,500.00, while some geothermal, wind and solar projects qualify for a 30% of cost with no maximum.  Most of these credits expire at the end of December 2010, while others are good through December of 2016.

So the next time you’re thinking about a huge extension or expansion, give it more thought to determine if it really is your best investment, and factor in the length of your anticipated stay in your current home.

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