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What is Cost Vs. Value in Pittsburgh Home Renovations?
We use the Cost vs. Value report (download here) to discuss the investment value with a client before discussing specific costs. This helps to understand the broader value of our work, beyond just resale value, including design, craftsmanship, and long-term durability.
We understand the balance between cost and value is crucial, especially in a unique market like Pittsburgh. Below, we will explore key aspects, helping you to make informed decisions that will maximize your investment.
A lot of our customers want to make sure that the money they're spending will be a good investment. Cost vs. Value is a report that we use to help customers determine their budget on projects. Some of the projects have a better return on investment than others.
- John McCloskey, CEO, J. Francis Company, LLC
Exploring Pittsburgh's Real Estate Market
Pittsburgh, renowned for its rich history, diverse neighborhoods, and affordable living, boasts a dynamic real estate market. The city has seen steady growth, with rising home values and high demand for properties across many of its locales. This upward trend creates an ideal environment for home renovations, as improvements can yield significant returns on investment.
Pittsburgh is also known for its diverse neighborhoods, each with its own character and market trends. Understanding your neighborhood's specific demands can help tailor your renovation projects for maximum return. For example:
- Shadyside and Squirrel Hill: These upscale neighborhoods might see higher returns on luxury upgrades, such as high-end kitchens and bathrooms. Homes here are often priced higher, and buyers expect premium finishes and modern amenities.
- Lawrenceville and East Liberty: These trendy, revitalizing areas have many homes that are on the smaller side, emphasizing the need for the most efficient use of their footprints. Modern, stylish updates can attract younger buyers and renters who value contemporary living spaces and innovative design that maximizes functionality.
- Mt. Lebanon and Fox Chapel: Family-friendly suburbs where practical, family-oriented renovations like basement finishing and energy-efficient upgrades can be particularly valuable. These neighborhoods attract families looking for functional and sustainable homes, making such renovations a smart investment.
Understanding the Numbers: A Local Perspective on Remodeling Costs and Value
Specificity of Cost vs. Value Projects
The costs presented in the Remodeling Cost vs. Value Report (download here) are derived from detailed itemized estimates. Each project outlined is specific, with clearly defined areas and chosen selections. When comparing these data points to actual remodeling costs in a specific area, small differences in the project's size, scope, or the quality of finishes and accessories chosen by the homeowner can greatly impact the price.The Subjective Nature of Value
The "value" of a project at resale is always influenced by unpredictable factors. Changes that meet the current homeowner's needs might not align with what future buyers want. For instance, converting a small bedroom into a grand primary bath might be seen as losing a bedroom rather than gaining a bathroom. Similarly, adding square footage can solve immediate space needs but also increases maintenance costs and utility bills, which may not be appealing in an era of heightened energy awareness.The perceived value of a remodeling project also depends on several traditional factors affecting home values, including:
- The condition of the rest of the house
- The value of nearby similar homes
- Fluctuations in local property values
It's challenging to judge comparable values due to the ongoing presence of foreclosed properties and short sales. Until buyers feel confident that housing prices have stabilized, there will be a lack of urgency, contributing to downward pressure on house prices.
Do your Local Research
Resale value is only one of many factors homeowners should consider when deciding to remodel. The Cost vs. Value Report provides a broad view of the national housing market but is less accurate at predicting the cost and value of an individual remodeling project at a specific address. For the most accurate local perspective, it's best to get construction cost estimates from reputable local remodelers like J. Francis Company, LLC, and consult with an experienced real estate professional about home prices in your neighborhood.
Key Trends in the 2024 Cost vs. Value Report
The 37th annual Cost vs. Value (CVV) report from Zonda reveals that exterior improvement projects continue to offer the highest return on investment (ROI) for home sellers. Nine of the top ten projects with the best ROI are exterior improvements, reflecting the high value real estate professionals place on curb appeal.
Top Projects and Returns
Nationally, the project with the highest average ROI is garage door replacement, offering a 194% ROI, followed by entry door replacement (188% ROI) and manufactured stone veneer installation (153% ROI). Next on the list is a kitchen remodel, offering a 96% ROI. Compared to last year, the values of the top projects have surged. This trend is driven by higher mortgage rates and homeowners holding significant equity, favoring move-up buyers who demand quality.
What’s on the Decline?
Not all projects have seen value increases. HVAC conversion from fossil-fuel systems to electric heat pumps, which ranked first last year with a 104% ROI, has dropped to twelfth place with a 66% ROI. This change is due to lower natural gas prices and higher electricity costs, along with increased familiarity and skepticism among real estate professionals regarding the value of such conversions.
Market Fluctuations are In Your Favor
Project costs have generally risen over the past decade, while perceived values have fluctuated, especially post-pandemic. However, 2024 marks a turnaround with a 5.2% increase in average ROI for the 15 long-standing CVV projects.Home renovation in Pittsburgh offers a promising opportunity to enhance your living space and increase your property's value. By carefully considering the cost vs. value of different projects, understanding local market dynamics, and making informed decisions, you can ensure your renovations deliver the best possible return on investment.
Ready to get started? Download the 2024 Cost vs. Value report here.