It's Not What You Think: Why Our Home's Value Decreased Return to Articles
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The New Year brings a lot of excitement as everyone reveals his or her resolutions or ambitions. While most goals are focused around self-improvement and health, others could be anticipating upcoming vacations or home improvement projects. We are in the latter group and started the first phase of our master bath renovation over the holidays. Per my prior blog , where I touched on different financing options for a remodeling project, I revealed our master bathroom was outdated in browns and yellows and was desperately in need of a refresh. While we still have more to do, our vision is taking shape as new tile floors were installed and the outdated built-in tub was replaced with a more striking freestanding model.
As we added our new project details in RezDox, we noticed our home value decreased compared to what we saw in December. While it is exciting to see the equity gains and value growth for our bathroom, we noted that our total equity in improvements decreased by $4,861 since the fall of 2019. If we continued to add more upgrades into RezDox, including some portions of our remodel, why would our return on investment decrease? What happened between 2019 and 2020?
Some market fluctuation is anticipated because RezDox integrates with Zillow, allowing us to capture the latest Zillow Zestimate. However, there is an additional factor that contributed to the decline of our home’s value, the age of our upgrades. Another integration within RezDox leverages data from Hanley Wood’s Remodeling, who recently released their 2020 “ Cost Vs. Value ” report. While their report is invaluable for understanding the average return on investment, RezDox takes it a step further and personalizes this data for each home improvement project based on age and cost. As the calendar advanced another year, so did our prior renovations.
As we looked back at our Home History Log, we recognized our most expensive projects occurred right after our purchase in 2013. Although we still get compliments on our hand scraped hardwood floors, even I appreciate that our selection of dark espresso is no longer in style compared to the lighter, more natural shades of blonde and ash. “As trends change so does buyers’ expectations. If your kitchen is outdated and hasn’t been refreshed in the last 10-15 years, a buyer will discount the sales price as they anticipate the cost to remodel,” says Amanda Fein, Real Estate Professional, Kentwood Cherry Creek. “When I determine a home’s selling price, I am more focused on improvements that occurred within the last 3 years. RezDox makes it easy for me to know the age of each project and its cost, so I can incorporate the home's history into my evaluation.”
As we continue to review our calculations in RezDox, we obviously prefer seeing our equity in improvements grow, but it was a good reminder that not all projects yield the same return. As much as we still love our floors, we need to put our pride aside and accept our sunk cost. Over time all projects age and regardless of how much money you spent, depreciation will eventually affect your home’s value.
Co-Founder CEO, RezDox
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