Home RemodelingSARASOTA, Fla. – Dec. 12, 2017 – Home renovations as an investment for a future sale with hopes of recovering the improvement costs are a dicey prospect at best. Real estate agents and remodeling construction specialists caution against that assumption.
“Hardly anything will offer a net profit,” says Barry Grooms, Realtor, broker and co-owner of SaraBay Real Estate with his wife, Sherry. But some improvements “will help sell the property faster and will fetch a higher sales price.”
On the flip side, renovations for personal and lifestyle inclinations or remodeling an older residence after a purchase are commonplace and prudent. The popularity of HGTV’s portfolio of “reno” shows reflects public interest, but solid evidence comes from BuildFax. The data analytics firm has a new report showing residential remodeling outpacing new construction spending.
“Residential remodeling activity has increased by 30 percent since 2010,” BuildFax reported, though that began trending down in the Southeast during the last half of 2016.
Denny Yoder, president of Yoder Homes & Remodeling, is well acquainted with remodeling motivations. “The majority of our clients are improving their homes for personal lifestyle reasons,” he said. “About a third of our clients have just purchased the property or are converting it from a rental to a retirement home.
“While the concern for appropriate investment and not over improving is always important, we advise clients the more years they plan on keeping the property the less important this consideration is.”
While cosmetic and lifestyle enhancements are attractive and advantageous to homeowners, prospective buyers will take a different view should those renovations be unappealing.
The return on investment for an updated kitchen averages about 60 percent, a bathroom remodel around 68 percent and a master suite addition about 53 percent, Grooms said.
Michael Moulton, a broker-associate with Michael Saunders & Company, cites expensive new marble and/or wood floors as iffy. Those are “too much of a gamble that a new owner may want something other than what you install.” Plus, he said, “not all buyers would appreciate” expensive windows such as Pella and Anderson.
Basic infrastructure upgrades could prove valuable, though.
“The best improvements a home seller can make are replacing the roof, HVAC, electrical and plumbing,” Grooms said. “The reason for this is that most home buyers will have a professional inspection and most homes require homeowners insurance, and if the aforementioned items are not in good condition, it may increase carrying costs for the new buyer or an immediate out-of-pocket burden that is too much and break up a deal.”
Moulton emphasizes re-plumbing a house in neighborhoods where that is typically needed and replacing an aging roof.
That falls in line with the “Remodeling 2017 Cost vs. Value Report.” The website – – compares the average cost for 29 popular remodeling projects with the value those upgrades retain at resale in 99 U.S. markets, including the Sarasota-Bradenton-Venice region. Nationally, home maintenance projects, such as siding replacement, paid off best.
Curiously, every one of those projects undertaken in Southwest Florida, for example, paid back a higher return on investment than the national average. The highest differential came in at 27 percentage points – a garage door replacement – 104.1 percent here versus 69.3 percent nationwide.
“In general,” the report stated, “the hotter the market, the bigger the payback.”
This is the 30th anniversary of Remodeling Magazine’s first such survey, undertaken with the goal of providing an unbiased, third-party report on how much it costs for a professional to do a typical remodeling project as well as how much a real estate pro believes that project will increase a home’s value if it’s sold within a year of when the work was completed.
The methodology includes such factors as the cost of materials and labor in each market, subcontractor payments, taxes and additional considerations. The study compares the costs for the same hypothetical project in all 99 markets surveyed. Nationally, the 29 projects in this year’s survey paid an average of 64.3 cents on the dollar in resale value. The study broken down into 19 mid-range and 10 upscale projects.
Overall, the report found that newer and older trends continued. Improvements to the outside of a home produce higher returns on investment than interior projects. Curb appeal upgrades sell, be they to doors, windows or siding. Replacing those features proved better than a remodel, real estate pros said.
On the lifestyle front, Yoder cited bathroom remodels as “very common,” with hand-held and multiple shower heads being very popular. “Other popular requests in bathrooms are replacing bathtubs with walk-in showers and stand-alone tubs,” he said.
“Next in popularity are kitchen remodels followed by closet organization,” he added.
In several areas that Remodeling did not address, Grooms did. “Landscaping on average can return up to 150 percent of a return of investment,” he said. “Fencing may return up to 95 percent.”
The fence issue brings up an important matter. “The other area that I have observed that often helps a home sell faster and for more money is homes that are ‘pet friendly’,” Grooms said – which translates into wood, tile or laminate flooring, fenced yard or large yards. “More than 65 percent of homebuyers have pets, so making a home friendlier or decreasing the maintenance may help a buyer choose your home over one that is not!”
In the Sarasota market, Remodeling Magazine, published by Hanley Wood, reported only four projects with positive resale values. The installation of fiberglass attic insulation scored the best, with 124.4 percent rate of return. That is followed by replacing the entry door with a steel one (106.9 percent), installing a new garage door (104.1 percent), replacing the garage door with an upscale model (104 percent) and replacing the siding (100.9 percent).
Of the 2017 national averages, only attic insulation recouped more than the job cost, at 107.7 percent.
In upscale projects in SW Florida, a bathroom remodel (61.8 percent), a bathroom addition (64.1 percent), a master suite expansion (65.9 percent) and a major kitchen remodel (69.1 percent) scored the worst ROI (return on investment).
“Consumers often are surprised to see that some of the most common remodeling projects recoup the least costs,” the report said. The rate on investment for a mid-range bathroom addition scored the worst payback at only a 53.8 percent average across the country. “Not a single kitchen or bath project ranked higher than 17th out of the 29 projects,” Remodeling found.
The magazine’s research put quantitative figures on the value of curb appeal. Exterior projects had an average payback of 74.9 percent nationally, while interior projects returned 63.5 percent, the study said. Almost an identical percentage differential separated replacement and repair costs from remodeling improvement projects.
Plus, kitchen and bath upgrades require more costly skill and labor. “As a general rule,” the study said, “the simpler the job, the cheaper it is and the more likely it will have a high ROI.”
Here in hurricane country, a backup power generator holds a lot of appeal. The addition of that piece of equipment came in dead last among mid-range projects in Sarasota at 66.4 percent.
But the survey’s information was gathered before Irma knocked out electricity to thousands of households in September, and residents scrambled to purchase those units.
“Timing also figures here,” the study stated. Generator popularity surged after Superstorm Sandy struck, soaring some 20 percentage points. ROI has been slipping since then, but Hurricane Irma served as a reminder of the value of that equipment.
The remodeling and replacement industry continues to reach new heights. One only needs to check the large audiences for HGTV’s numerous programs that highlight home overhauls. “Fixer Upper” – HGTV’s highest-rated show ever – has made media darlings and design icons out of Chip and Joanna Gaines. Their Waco retail business has skyrocketed and their 40-acre farm made the Texas city a destination.
This year, with an average of more than 30,000 visitors a week, their Magnolia Market business, complete with grain silos, should draw about 1.6 million people, according to the Waco Convention and Visitors bureau.
Their “blockbuster” series ranked as one of the top two most-watched cable telecasts in Nielsen data that covered their season four finale this past summer. Two of HGTV’s other home renovation series, “Property Brothers” and “Flip or Flop,” have also fueled the network’s rise even as ratings for other cable television companies fell.
One common denominator of these shows is ripping out walls to unite kitchen, dining and living rooms. Moulton supports the open floor plan as a positive on home values.
Did you know? Duke Energy has an Energy Efficiency Program that allows homeowners to get rebates on improvements. A home assessment must be completed either online, via an in-home appointment or by phone. I completed the assessment online and am now getting new insulation put in my home with a $200 rebate from Duke Energy. The current insulation is only 6″ thick and does not come close to meeting the thickness standards. The total cost to me will be $462 and I will surely save on future electric bills.
After I completed the online assessment, Duke also sent me the pictured box of energy efficient items. The weatherstrip was easy to put around my door, and who can’t use light bulbs? To find out more, please visit Duke Energy’s website.
Here are some new Florida State laws that I find noteworthy:
SB 1400 allows property owners to trim or remove trees on their property without a permit as long as they have a letter from a certified arborist or landscape architect stating the tree is a danger.* This change should save homeowners time and money in the permit process.
Banning vegetable garden restrictions
Floridians, yes we can turn our front yards into vegetable gardens! A new law established in SB82 prevents local governments from prohibiting them. The issue has come up numerous times nationwide when local governments deemed that front yard vegetable gardens are not aesthetically attractive. In one instance, a Miami Shores couple had to uproot their vegetable garden. My review of the City of St. Petersburg’s ordinances leaves me unclear if there is anything that would prohibit them. This new law makes it clear. I know I have seen several front yard vegetable gardens in St. Pete, including my own neighborhood of Central Oak Park.
This article in the Tampa Bay Times elaborates on the subject. Homeowners associations may have their own rules. Also note that ordinances designed to allow access to the right-of-way and to allow clear road views may still apply.
HB 447 allows local governments to close a permit six years after its issuance as long as no apparent safety hazards exist. It also prevents local governments from penalizing property owners for an open permit that was applied for by a previous owner. This change goes into effect Oct. 1, 2019.
SB1552 establishes the Florida Red Tide Mitigation and Technology Development Initiative – a partnership between the state and Mote Marine Laboratory to develop technologies that can control and mitigate red tide and its impact. This state bill sets aside $3 million a year for the next six years to fund the project. In addition, more than $625 million in environmental funding will be used for things like Everglades restoration, completion of the project that will raise Tamiami Trail, springs restoration, beach restoration projects, a red tide/blue green algae task force and a septic-to-sewer cost-share program.
As of now, tests show no signs of red tide in the Gulf. Testing is reported on the Florida Fish & Wildlife’s website “Red Tide Status.” Scientists are forecasting a “dead zone” in the Gulf of Mexico this year due to high levels of rain. Read more about this dead zone here.
*Please consult with an arborist before cutting down trees.
Additional reference: Florida Realtors
One of the things that makes St. Pete special are the unique neighborhoods, each with a unique feel and characteristics. They are diverse and many of them have active communities. Some are driven by voluntary neighborhood associations that promote neighborhood enhancement and community involvement. The sense of community is one of the things that drew me to St. Pete.
Some of the more active neighborhoods have regular social gatherings, events and meetings for residents. “Porch Parties” is the prevalent description for neighborhood parties held by neighborhoods where residents volunteer to open their homes and host gatherings. Porch Parties are predominantly outdoors which is fitting given our fabulous St. Pete weather that allows an outdoor lifestyle all year long. Party goers show up carrying a dish to share and a beverage of choice.
The neighborhoods range in architectural styles from bungalows, craftsman homes, mid-century modern, Victorian, Spanish and Florida style. Many of the homes in St. Pete were built in the 20’s, 40’s and 50’s. New construction is rare (except for the upscale condos downtown). Some neighborhoods are lined with brick streets flanked with mossy oak and palm trees. Many of the neighborhoods have a diverse makeup of styles – not cookie cutter neighborhoods.
The other thing I love about St. Pete is that you have the beach on one side and downtown on the other. Central Avenue runs straight across St. Pete from downtown, which sits on Tampa Bay, to our Gulf Coast Beaches. Heading west on Central Ave., once you leave the mainland, you cross the Treasure Island Causeway. The entire span is approximately 9 miles from downtown to the beach! We have neighborhoods with a beach vibe, a historic atmosphere, and a downtown vibe.
The City of St. Petersburg says it supports more than more than 110 neighborhood and business associations, and the City’s website says, “The city welcomes residents to take part in improving our neighborhoods and quality of life by voicing concerns and pinpointing priorities.” The City also gathers input from neighborhoods for future planning through neighborhood plans submitted by associations. For more information, visit the City’s page on neighborhoods.
Given there are so many neighborhoods in St. Pete, we also have a Council of Neighborhood Associations (CONA). CONA’s website lists 86 neighborhoods! The full list below, and the following is a snapshot of just a few:
Historic Old Northeast
Nestled on the north side of downtown and Tampa Bay, development of Old Northeast started in 1911. The makeup of home styles includes Queen Anne, Victorian, Colonial Revival, Spanish Eclectic, Craftsman Bungalow, Prairie and even Italianate. The Historic Old Northeast Neighborhood Association’s website says, “Listed on the National Register of Historic Places in 2003 Old Northeast is characterized by waterfront green space, brick streets, granite curbs, hexagon block sidewalks, brick alleys, mature trees and lots of welcoming front porches. The neighborhood is an excellent example of preserving and restoring the best of the past while offering a high quality of living in the present where neighbors possess a strong sense of community identity and pride.” They have a busy event schedule filled with porch parties, parades, holiday events and meetings.
The neighborhood’s boundaries are 5th Avenue N/NE on the south and 30th Avenue N/NE on the north with Tampa Bay and Coffee Pot Bayou its eastern boundary and 4th Street N its western boundary. The neighborhood contains approximately 4,100 households and is home to some 10,000 residents.
Historic Kenwood calls itself “Neighborhood of the Arts.” Located just west of downtown, the Historic Kenwood Neighborhood Association describes the neighborhood as “is a charming neighborhood filled with historic bungalows and tree-lined brick streets. We enthusiastically embrace the arts, and we actively cultivate an authentic, friendly culture where people are welcoming, diverse, and engaged.
In addition to monthly porch parties, Kenwood events include “Pinot in the Park,” BungalowFest, Founder’s Day and Kenwood Kidz. The section of Central Avenue that borders Kenwood has seen great revitalization in recent years with the opening of trendy restaurants, bars, breweries, boutiques and antique shops.
Central Oak Park
Central Oak Park is where my home is, so I couldn’t leave it out! It is just a couple of miles west of downtown and only 5 miles from the beach. It is one of the largest neighborhoods in St. Pete with 3,900 residences including a few condominium and townhouse communities. The home prices in Central Oak Park are lower than average than other parts of St. Pete and I feel buying a home in Central Oak Park is a sound investment. The neighborhood has a diverse makeup of bungalows, a few craftsman and Spanish style homes and small cottages. There is a good deal of home renovation taking place and the Central Oak Park Neighborhood Association is becoming increasingly active. The neighborhood holds monthly porch parties, a Holiday Party on some of its blocked off brick streets, monthly membership meetings and has other events in the works like a spaghetti dinner and a neighborhood plant and seed swap. The neighborhood spans from 34th St N (US-19) to 49th St N and 13th Ave N to 5th Ave S.
Gulfport is technically its own City due to incorporation, but with approximately 12,000 residents it’s around the same size as other St. Pete neighborhoods. Gulfport homes are a mix of small cottages and bungalows. Gulfport has an appealing water front downtown with thriving restaurants and indecently owned shops. Gulfport holds regular artwalks. The annual GeckoFest is a costumed festival featuring themed live music, vendors, strolling and stationary street performers, a quirky walking parade, colorful costume contests, and the ever-popular end-of-the-day dueling street dances
This fabulous video best describes Crescent Lake.
List of St. Petersburg Neighborhood Associations as listed on the Council of Neighborhood Associations’ website:
1. 22nd St Business, Historical & Cultural District
2. Allendale Terrace Neighborhood Association
3. Americana Cove
4. Azalea Homes Community Association
5. Bahama Shores Homeowner’s Association
6. Barcley Estates Home Owner’s Association
7. Bartlett Park Neighborhood Association
8. Bayou Highlands Neighborhood Association
9. Bayway Isles Homeowners Club, Inc.
10. Brighton Bay Neighborhood
11. Broadwater Civic Association
12. Casler Heights Neighborhood Association
13. Causeway Isles Neighborhood Association
14. Central Oak Park Neighborhood Association
15. Clam Bayou Neighborhood Association
16. Childs Park Neighborhood Association
17. Coquina Key Property Owner’s Association
18. Crescent Heights Neighborhood Association
19. Crescent Lake Neighborhood Association, Inc.
20. Crossroads Area Homeowners Association
21. Disston Heights Civic Association
22. Downtown Neighborhood Association
23. Driftwood Property Owners Association
24. Eagle Crest Civic Association
25. Eden Isle Civic Association, Inc.
26. Edgemoor Neighborhood Association
27. Euclid Heights Neighborhood Association
28. Euclid-St. Paul Neighborhood Association
29. Fossil Park Neighborhood Association
30. Fruitland Heights Neighborhood Association
31. Gateway Neighborhood & Crime Watch Association
32. Grand Central District
33. Greater Grovemont Neighborhood Association
34. Greater Pinellas Point Civic Association
35. Greater Woodlawn Neighborhood Association
36. Harbordale Neighborhood Association
37. Harbor Isle Homeowners Association
38. Harris Park Neighborhood Association
39. Highland Oaks Neighborhood Association
40. Historic Kenwood Association
41. Historic Old Northeast Neighborhood Association
42. Historic Park Street Neighborhood Association
43. Historic Roser Park Neighborhood Association
44. Historic Uptown Neighborhoods, Inc.
45. Holiday Park Home Owner’s Association
46. Isla Del Sol Owners Association
47. Jungle Prada Neighborhood Association
48. Jungle Terrace Civic Association
49. Lake Euclid Neighborhood Association
50. Lake Maggiore Park Neighborhood Association
51. Lake Maggiore Shores Neighborhood Association
52. Lakewood Estates Civic Association
53. Lakewood Terrace Neighborhood Association
54. Live Oak Neighborhood Association
55. Magnolia Heights Neighborhood Association
56. Maximo Civic Association
57. Meadowlawn Neighborhood Association
58. Mel-Tan Heights Neighborhood Association
59. Methodist Town Neighborhood Association
60. Northeast Park Neighborhood Association
61. Northeast Terraces Neighborhood Association
62. North Kenwood Neighborhood Association
63. Old Southeast Neighborhood Association
64. Pasadena Bear Creek Neighborhood Association
65. Palmetto Park Neighborhood Association
66. Pasadena Golf Club Estates
67. Perry Bayview Neighborhood Association
68. Point Brittany Community Association
69. Placido Bayou Community Association
70. Ponce De Leon Neighborhood Association
71. Renaissance Neighborhood Association
72. Riviera Bay Civic Association
73. Riviera Bay Subdivision Homeowners Association
74. Shore Acres Civic Association, Inc.
75. Snell Isle Property Owner’s Association, Inc.
76. Thirteenth Street Heights Neighborhood Association
77. Thirty-First Street Neighborhood Association
78. Tropical Shores Neighborhood Association
79. Venetian Isles Homeowner’s Association, Inc.
80. Westminster Heights Neighborhood Association
81. West Shore Village Neighborhood Association
82. Wildwood Heights Neighborhood Association
83. Winston Park Neighborhood Association
84. Caya Costa Neighborhood Association
85. Garden Manor Neighborhood Association
86. Grand Central District
87. Ling-A-Mor Neighborhood Association
88. St. Pete Heights
by Michelle L. Anderson, MBA, REALTOR, RE/MAX Metro
Most of the year, Florida enjoys an active real estate market. Unlike states to the north that are not active in cold winter months, Florida benefits from our fabulous winters and our snowbirds. The short answer to this question is that late winter – early summer are the BEST times to put a house on the market. But the only time I advise sellers to NOT list a house is the 2nd half of December through the first week of January. The reality is that real estate activity slows to a crawl during the holidays. However, at any given time there are lots of people who need to move and homes sell all year long. There are a few things to consider when defining what is the “best” time, because is it best to sell the fastest, or at the highest price or do these factors coincide?
I looked at the numbers for Pinellas County for 2014 – October 2018* to see exactly what the sales trend looks like by month. Below is a graph that shows the number of closed sales for each month. Keep in mind that homes that closed likely went on the market two months prior. The average days homes have been on the market in the past year is 26 days and on average, most contracts close in 30 days.
You will see that sales consistently spike in the spring and summer. They also consistently die down in the fall and have a short spike again right at the end of the year. I hypothesize the end of the year spike is due to people making purchases prior to the end of the year in order to qualify for homesteading or investors looking to acquire a tax deduction. Another factor may be people from up north looking to buy in time to enjoy their new home for the winter.
The absorption rate is pretty much what it sounds like. It is the rate that listings are selling and it is calculated by dividing the number of closed sales by the number of active listings. A lower rate means that homes are selling slower (buyer’s market) while a higher rate means that homes are selling quickly (seller’s market). One of the highest rates in recent years was 44% in June 2016 and I can attest to encountering numerous bidding wars for homes at that time.
When the absorption rate is going up, sellers can list their homes at a higher price. However, when the absorption rate is declining, homes shouldn’t be listed at a higher price. In other words, a declining rate indicates that it isn’t a time to “push the market higher,” and that demand is decreasing.
From 2014 – 2018, the absorption rate has been trending upward. The rate also seems to follow a similar pattern with the number of listings, the number of sales and the median sales price. Homes that are on the market over the holidays sit the longest and the absorption rate tends to peak for the year in the spring and summer.
Home appraisers do factor absorption rate into their valuations. This means that when the rate is climbing, they may add additional value to a home. However, when the absorption rate is declining, they are less likely to increase value for market factors.
While the median sales price has been trending upward at a high rate over the last few years, the trend is not a perfectly straight path. Below are some charts that show the median sale price by month. Interestingly, each year the highest median price for the year occurs in the spring/early summer and dips down in the fall with another small spike prior to the year end. This trend mirrors the trends of the number of closed sales, number of listings and days on market.
How much difference in price does it make? An article on CNBC says that on average, homes that sell at peak times sell for $1,500 more. The article also says that the best time to list homes in warm weather markets like Florida is March.
Days on Market / Median Time to Contract
The median number of days homes were on the market prior to going under contract follows a similar trend with the longest average time falling around the holidays and beginning of the year and then declining until reaching a low point in early summer.
Want to know what day of the week is best to put a house on the market? Visit my previous blog: Best Day to List a Home
*Numbers as reported from the Pinellas Realtor Organization. Statistical calcualations and analysis conducted by Michelle L. Anderson
Graziosi, Dean. “What Is Absorption Rate in Real Estate and Why Is It Important?” Huffington Post 12/6/17 0
Olick, Diana. “Homes sell fastest during these two weeks” CNBC. 3/2/2017
The day your home is listed on the market does matter.
When working with sellers, I always try to schedule the listing to go live during the middle of the week. So when I stumbled on this article that substantiates this practice, I decided to turn it into a post to reinforce this practice.
This article explains that listing a home in the middle of the week allows for optimal showings and statistics show that houses listed in the middle of the week actually sell for a higher price. The timing allows the home to be included in buyers scheduled showings over the weekend and allows for timely scheduling of open houses.
When a home is listed over the weekend or early in the week, it does not allow for buyers to schedule weekend showings. This equates to wasted days on market and statistics show that the longer a house is on the market, the lower the sales price is. When selling a home, it is ideal to hit the market running and make every day count.
Want to know what time of year is best to put a home on the market for sale? Read my blogpost – When is the Best Time of Year to List a House for Sale?