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A low return on remodeling?

What does remodeling add to the value of a house?

Not as much as it did a couple of years ago, according to an upcoming survey.

Remodeling magazine's annual "Cost vs. Value Report" will be published Nov. 1, so up-to-date information on how much bang you can get for each buck invested in rehab projects isn't public yet. But magazine editorial director Sal Alfano said the raw numbers indicate that the days of seeing returns of at least 80 cents to 90 cents for each dollar invested in renovations are mostly behind us.

The record-high returns on remodeling investments in 2004 and 2005 are history, Alfano said. In 2007, just 14 percent of remodeling projects had a return of at least 75 percent. That was down from 16 percent in 2006 and 20 percent in 2005.

The best return in 2007 came from replacing old siding with fiber-cement material: Homeowners got an average of 88.1 cents for each dollar invested after they sold their houses. Fiber-cement siding also brought the best results in 2006, at 88 cents to the dollar. But bigger remodeling projects involving kitchens and bathrooms apparently no longer guarantee the giant returns of previous years.

The 2007 decline "reflects the slowdown in the real estate market" and high materials costs, Alfano said in an e-mail. The return is not bad, he said, because homeowners are paying "12 cents and 43 cents on the dollar to remodel (their) home," depending on the type of project being done. And, he said, "you get the use of the newly remodeled space until you sell."

Upgrades still make an impact even in a market that's flooded with new homes and resale inventory, said Tim Burch of Burch Builders Group in Warrenton, Va.

"The ones that have renovated are the ones that are selling," he said. "And what better way to wait out this market than to be in your beautiful kitchen?"

David Merrick, owner of Merrick Design & Build of Kensington, Md., said it does not pay to try to outplay the market.

If the market is hot, "adding a bathroom doesn't matter" much in resale value because people will pay almost anything just to get a house, he said. In a slower market, buyers may be looking at criteria other than a property's condition, he said.

"Where I work, a lot of the price is related to the school district," Merrick said. "A house can cost $200,000 more just because you've crossed the school-district line. So whether there is a new bath or kitchen doesn't matter."

A property must be usable and presentable to sell, he said, so repairs are important. Sometimes paint and de-cluttering are enough, he said, but sometimes a house just looks dated.

Before spending more than you can get back, though, he suggests talking to a real estate agent familiar with the neighborhood. "You have to look at these on a case-by-case basis," he said.

Deciding whether to rehab before selling "really depends on how bad your kitchen and baths are," said Christopher Landis of Landis Construction in Washington. Adding square footage through renovations "gets you every dollar back," he said.

Real estate investor Joe Rinker can testify to that, and to how the overall housing market has led to some rethinking of how much to spend on renovations.

Rinker, a real estate agent and the owner of a Maryland renovation company, has refurbished about 15 houses for resale in the past three years. When the market was white-hot, he said, "I didn't have to worry about material costs" because buyers would pay whatever was necessary.

"As the market has eased, I still use quality materials; I still almost always use granite in most kitchen renovations, for instance," he said, but he is not as determined to hit the high end on everything anymore. "All these reports saying people are now getting 80 percent return on kitchens and baths, I think they're too high. With all the competition, it's probably in the 60s to 70s now."

He said he remains sold on the value of capturing "found space" in renovation projects. Houses with unfinished basements, attics and porches are golden — if the rehab does not cost more than the neighborhood can bear, he said.

"You get more bang for the buck by finishing off a basement, especially if you can finish it off and add a bathroom at the same time," he said.