Remodelers are keeping busy as low interest rates and increasing home values prompt more homeowners to put in new kitchens, bathrooms with Jacuzzi tubs and master bedroom suites.

As the housing market continues to show signs of strength, remodeling is paying off in terms of a home's value when it comes time to sell, a new study concludes.

This year's 2004 Cost vs. Value Report, issued recently by Remodeling Magazine in conjunction with the National Association of Realtors, found that, nationally, the remodeling projects that recoup the highest percentage of the cost in a home sale include kitchen and bathroom renovations, and siding replacement.

In Baltimore, where home values have been rising by double digits for more than a year, the cost benefits of many remodeling projects exceed the national averages.

The biggest return for remodeling investments in the Baltimore area starts on the outside of the home, with a roof replacement recouping an average of 241 percent of its cost and a siding replacement bringing back 195 percent, according to the survey. Bathroom renovations, window replacements and deck additions also rated high

The analysis was done in part by HomeTech Information Systems, which produces remodeling estimating software in Bethesda. It is based on 356 survey responses by industry professionals. Tom Stevens, president-elect of the Realtors group, said the percentages are based on the sale of a home in today's dollars.

Nationally, a minor kitchen remodeling project, siding replacement and mid-range bathroom renovation - costing a total of less than $16,000 - would each return more than 90 percent of their initial cost when the house was resold.

"The areas that are the lowest-cost expenses that are put into property seem to be recovered at a higher percentage - and essential things, like a minor kitchen remodel," said Stevens, senior vice president of business development for NRT Inc., the parent company of Coldwell Banker Residential Brokerage.

Most experts said recouping the cost of a remodeling project during a resale depends on several factors, including the neighborhood, area home values and the quality of the renovation.

Most real estate agents recommend that homeowners spend a few hundred dollars on making sure the front of the house looks good to improve its curb appeal.

That's why, experts said, siding and roof replacements did well in the survey, because they are essential staples from a buyer's perspective. They are relatively inexpensive and help to make a good first impression on the buyer, experts said.

But for those who are looking to increase the value of their homes through remodeling on the inside, Forest Hill appraiser Sharon Cremen said the best place to start is the "magic triangle" area of the stove, refrigerator and sink.

"Women usually decide which house to buy, and they go right to the kitchen," said Cremen, who owns Cremen Appraisal and Consulting and has been determining home values since 1977.

Not every remodeling job makes a home more valuable. And some experts said homeowners could remodel too much and see little, if any return, if the renovations are not consistent with other homes in the neighborhood.

Swimming pools can be a tough sell to elderly couples or couples with young children because of liability and the extra insurance involved.

"Pools are probably the worst in this area," Cremen said. "A good pool can probably cost $35,000 and return $5,000 to $10,000."

With the three-year housing boom and extraordinarily low mortgage interest rates, many homeowners have been able to refinance and take advantage of the growing values of their houses. Also because of the housing boom, many homeowners have chosen to remodel instead of move.

"Home values went up so much in the last few years that homeowners have equity in their homes," said Shane Zwingelberg, president of the Home Builders Association of Maryland's Remodelers Council. "If they sell or upgrade, they would spend more on getting a new home than on remodeling."

According to Harvard's Joint Center for Housing Studies' latest Remodeling Activity Indicator - a quarterly estimate of homeowner repair and maintenance - Americans spent $128 billion on home improvements during the past four quarters, 5.1 percent more than in the previous year.

The National Association of Home Builders said its recent Remodeling Market Indicator - based on 478 responses to a survey of industry professionals - suggests that the remodeling industry continues to show strength.

"It's pretty positive, and the numbers are bearing it out," said Gopal Ahluwalia, the group's staff vice president of research.

Zwingelberg, who owns the Catonsville remodeling company Zwingelberg Enterprises, Inc., said most owners remodel not to increase the value of their homes but because that's where they spend the majority of their time and they want to be comfortable.

"I don't think they're looking at it as an investment," he said. "They have a reason or purpose for it. It's outdated and they want it to look better."

But even if investment isn't the primary motive for remodeling, it becomes a consideration.

"They're definitely aware of that," Zwingelberg said.

When Douglas Burnett decided 18 months ago to renovate his Columbia home, he was mainly thinking of adding a room for the purpose of entertaining friends and giving his teenage sons a place to hang out with their buddies.

"We had enough room. We just wanted to have an area where we could do a lot of entertaining in a very nice way," he said.

Burnett had his basement renovated to include a wet bar, entertainment center, wine cellar, office and bedroom. His mother was going to move in with them, so he added an in-law suite with living room, kitchen, eating area, bedroom, bathroom and walk-in closet.

The renovations took almost six months and cost $110,000. The cost and the time it took to finish it were no surprise. But he was surprised at how much more the house is worth now. Before the renovations, Burnett's home was appraised at $394,000. After they were finished, the home was appraised at $600,000.

Mount Airy remodeler Craig Knott said not everyone should expect that kind of return on remodeling investments. "That may be the best case scenario," he said.

Homeowners can wind up waiting a long time to have the work done.

"We're swamped. Normally this time of year it's not this way," said Knott, who is president of the National Association of the Remodeling Industry of Mid-Maryland and the founder of Houseworks Unlimited, a remodeling company. "They're going to have to wait. There is a process you go through, whether it's a bathroom or a second-story remodeling."

Cremen, the appraiser, said the best thing a homeowner can do to maintain value is to avoid letting the home fall into disrepair. Then, when it's time to move there isn't a lot of remodeling to do. "If you do a little bit along the way and the boss says we're going to move you, you just need to pull your house together a little bit to show it."

Estimated return on fix-ups

Project Job cost * Baltimore National

Roof replacement $10,633 241% 81%

Siding replacement $6,225 195% 93%

Bathroom remodel ** $9,424 182% 90%

Deck addition $6,597 154% 87%

Window replacement *** $8,706 130% 85%

Kitchen remodel **** $14,551 106% 93%

* Average costs are for the Baltimore area; national averages are similar in most cases

** Classified as a midrange renovation and includes updating a 25-year-old bathroom

*** Classified as a midrange renovation and includes replacing 10 windows

**** The 200-square-foot kitchen remodeling project is classified as a minor kitchen renovation

Source: 2004 Cost vs. Value Report, by Remodeling Magazine and the National Association of Realtors. Survey included 356 responses and has an error rate of plus or minus 5 percent to 10 percent.

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