Originally it cost $40,000, but the renovation will be $160,000, according to the ballpark estimate of a contractor we spoke with. All we want is to insulate, update our kitchen, add a family room and turn two bedrooms into a master bedroom suite with an updated bathroom and separate closets. Is the cost realistic? It just seems out of control. How can we avoid such extreme costs and get what we want?
A. Move. To get everything you asked for, you should consider other homes that already meet your requirements. When you find there¹s no comparison between what you have and the cost of moving, you may consider an efficient design, reducing your current, ongoing expenses. With new technology that could improve your life, reduce operating expenses, help handle the time spent maintaining your home, and give you pleasure, there comes a price.
Over the years, several factors ‹ inflation, energy and labor costs, insurance, permit fees and taxes, and just plain greed ‹ have caused construction to become a financial ordeal. Costs have gone up for construction at a faster rate than inflation. The reason is that real estate has gone up. According to economist Dr. Irwin Kellner of Hofstra University, housing has doubled in value in the past 10 years, while personal income for some has dropped and for others has increased less than 10 percent. So people place more value in their homes and have used them as a financial tool, borrowing against them as personal savings have fallen.
With the value of homes high, everything about them is perceived to be more valuable, including renovation. That¹s also the reason why McMansions have sprung up. People are seeking the real estate rule of ³highest and best use² for property. The home, depending on its location, is being treated as a bank account by most Americans. But your neighbors probably don¹t like the expanding, and have pressured politicians to restrict expansion, especially on smaller properties. Costs for permits and taxes reflect some of that governmental pressure to limit what you¹ll be able to do.
Insurance companies have also put pressure on costs, since the payout for job site injuries, fraud for false injury claims, storm damage payouts and inflation have caused some contractors to limit the type of work they do. This means that contractors who can manage the increased overhead have to pass the costs on to you. And of course, everyone sees your renovated home as more valuable, so they tax it and use it to compare the increased value to sell their own homes for more. Architects are trained to find ways to save you money over the life of your home, but since it costs more to save much more, the average homeowner refuses to spend for low-voltage lighting, thicker walls with more insulation, solar energy products, increased day lighting and low-maintenance finishes.
Just like people, two identical homes side by side, over time, will not compare if one has quality design features in its guts, while the other is just a cosmetic beauty. If you like where you live and can spend the money on a well-designed home that can save you future expenses on energy, insurance and maintenance, then the pill you need to swallow is worth the quality of life you¹ll enjoy. Otherwise, pack up the covered wagon and Š good luck!
Readers are encouraged to send questions to: HERALD Homes
2 Endo Blvd., Garden City, NY 11530
Attn: Monte Leeper, architect.
