The dollar you spend on repainting the exterior of your house this year could produce two to three dollars in immediate resale value--a boost that could be particularly helpful in a noninflationary economy.
Spend the same dollar on a new solar heating system or a luxury remodeling of your master bathroom, by contrast, and you won't get anywhere near the immediate return in capital value.
Those are just two of the consensus opinions emerging from a survey of top housing appraisers around the country--all members of the prestigious board of governors of the Society of Real Estate Appraisers, the industry's professional association.
The appraisers agreed that:
* With inflation now running at levels unseen in the United States for nearly two decades (the consumer price index rose less than one-half of 1 percent during the past six months), significant home-value increases are becoming far more dependent upon cost-efficient improvements and renovations.
* There are important variations in the "values added" by different forms of home improvement that homeowners, sellers and buyers need to understand if they're going to adjust to the new, noninflationary economic environment.
* Some of the highest yielding improvements in appraisal terms are those that cost relatively little. Cosmetic changes such as a fresh exterior paint job, for example, probably produce the most reliable large return on your money.
"Dollar for dollar, there's just nothing that adds resale value as quickly or surely as paint," says North Carolina board of governors appraiser Bill Hylton.
A $1,500 exterior paint job, for instance, easily could boost the sale price potential of a home by $3,000 to $4,000--no matter how low the rate of inflation in the economy overall.
Gains of that magnitude aren't guaranteed, of course, Hylton hastens to add--especially when owners neglect other time-tested rules of value creation, such as the market's prevailing tastes in colors or styles.
* Landscaping ranked near the top of many appraisers' lists as a high-yielding improvement with easily controllable costs. A dollar's worth of shrubbery, sod, flowering bushes and trees, for instance, commonly will add at least that cost to the resale value of the home. Exceptions would be where the homeowners went overboard--sinking a much higher percentage of their total housing dollar into landscaping than the norm for the neighborhood.
* Energy improvements, especially those involving relatively small investments, also ranked high on appraisers' lists. New storm or thermal windows, for example, or upgradings of insulation typically yield immediate dollar-for-dollar returns. On the other hand, solar heating or hot water systems, although desirable in conservation terms, ranked lower--mainly because appraisers perceive their initial capital costs as taking longer to recover.
* Interior-room improvements yield widely varying returns on the dollar, according to the appraisers, but kitchen modernizations rank higher than any other.
"If you can make a kitchen more functional and attractive--and you're selling to a conventional single-family market, then you're going to get back most, if not all, of what you sink into a modernization job," said a northern California appraiser. Again, the exceptions would be cases of massive overimprovement--a $25,000 kitchen rehab, for example, in a $50,000 house.
Adding new rooms or converting existing spaces can produce dollar-for-dollar appraisal gains, particularly where they bring a substandard house up to neighborhood-size norms. That formula doesn't work, though, "where you're adding on a bedroom to a house that already has enough to conform to local demand patterns," noted one Ohio appraiser.
Putting on a fourth bedroom in a community where declining family sizes require no more than three "probably won't fully pay for itself in resale terms for a number of years, if ever," said Jerome Tysen of Milwaukee.
* Lowest ranked on most appraisers' lists for value-added improvements? High-cost, high-prestige improvements such as swimming pools and tennis courts. Unless you live in a neighborhood where everybody but you has a pool, don't count on getting more than 20 to 30 cents on the dollar in immediate resale gains. Ditto for tennis courts, $30,000 in-house "spas," high-technology game rooms and other exotica.
"Whenever your renovations have the net effect of slicing your market target into smaller and smaller slivers, then you know it's going to be tough to get back every penny you've invested when it comes time to resell," counseled Ronald Novacek of Stockton, Calif.