Return on Investment for Siding Still High

Siding still provides a decent return on investment — one of only a few home improvements holding its own in a shaky market. Although the numbers are up and down, many projects have generally been bringing in a lower ROI in the last 10 years.

In 2005, homeowners could expect an 86 percent ROI on home improvements. The cost-to-value ratio hit a low in 2011 with a 57 percent ROI, according to Remodeling magazine (check out the full report here: http://goo.gl/xmE8Oo). That’s a whopping 30 percent difference, and that can translate into tens of thousands of dollars lost for today’s homeowner.

Whereas the value of home improvements began a steady decline in 2009, interrupted by a slight rise in 2014 followed by another drop this year, the real culprit in this equation is the rising costs of renovations. What causes these fluctuations?

FREE MARKET ECONOMY

The U.S. economy affects wide swaths of many industries, and real estate and home improvements are two of the biggies. The rising value of many homes has given birth to a cash cow for many homeowners in the form of ballooning home equity. Many homeowners are choosing to use this found money to remodel, making two-by-fours a hot commodity. With the rising cost of materials comes the rising cost of remodeling.

Luckily, no two-by-fours are necessary when you get new siding. And this is where a closer look at the numbers shows an important difference.

While the overall ROI is lower, the percentage varies for different projects in different areas of the country. A kitchen remodel in rural Iowa could offer a 50 percent ROI, while the same project could net San Francisco homeowners an ROI over 100 percent. In fact, the ROI on midrange vinyl siding has increased, from 78 to 80 percent.

WHAT YOU SEE IS WHAT YOU GET

Numbers-crunchers theorize that exterior projects are less affected by these market fluctuations because they are more visible — no one can see your granite countertops from the street. Curb appeal has a huge influence over property perceptions. Of course anyone house shopping is going to look at the inside of a home, but many can’t get past the lasting image of a shabby exterior, regardless of what they find inside. People are left with the impression that if the outside isn’t taken care of, the inside isn’t either.

That’s why if you’re thinking of selling your home, it’s critical the exterior be in tip-top shape. And even if you plan to stay in your home for a long time, it’s more satisfying to spend your hard-earned dollars on a project that will stand the test of time and be a true investment for you.

Call Renovation by Burbach to find out more about home exteriors and what type would be best for your house and budget. New siding for your home will provide you with the value and the return on investment you are looking for in your next home improvement project.