From Dean Dowd on January 30, 2009 in General Remodel
Are you a homeowner based in Boston? If you dwell in the Athens of America and youre undecided about remodeling, veteran construction expert Tom Frangos has some advice for you. Toms company, Build America, has reliably serviced Boston, Northeast Massachusetts, and southern New Hampshire for 23 years. The company specializes in high-quality turn-key construction and solar services. Heres Toms guest post about remodeling in todays economy.
What improvements to your home make sense under current economic circumstances?
There are definite regional differences in answering the question. Because we deal in the Northeast, let me speak to that question there. Other regions, especially overbuilt ones, will be substantially different.
Background on Beantown
Metro Boston, a/k/a The Hub or Beantown, has a very strong and diverse industry base made up of higher education, medicine, financial services, and high technology. It also was not subject to heavy overbuilding simply because the large tracts of land available in some other parts of the country are not available here. Many neighborhoods are between 100-200 years old as a result, which is not the case elsewhere.
This combination or relatively scarce supply of land and a healthy economy leads to renovation of the current supply vs. building new. However, because of the age of many buildings, this isnt for everybody. Very old homes in the close-in suburbs typically used asbestos in a number of places. Lead paint was also very common. These two items can lead to expensive fixes in very old homes. However, most of these costs are recoverable because the value in the city and close-in suburbs remains well-established. Boston has seen little loss in the value of homes compared to most other large cities, yet some neighborhoods remain definitely more desirable than others. Its the old location thing at work here.
Best Long-Term Investments
Additions and New Foundations
The larger jobs that make sense are 2nd story additions and additions on new foundations attached to the existing. These typically return more than 100%, whereas in other regions, this number is less attractive. Adding another story can double or triple the living area of an existing home in a good neighborhood. Because the land is so valuable, the incremental cost of such a large addition is relatively low compared to the overall value of the project. The result is a substantially new home at a much reduced cost compared to selling and buying a larger home in the same neighborhood. Plus, the second story, roof, heating system, electrical system, siding, etc. are all new. You just dont want to be the best house in a so-so neighborhood when all is said and done.
Because the Northeast is cold in the winter, heating is a big cost concern. The best long-term investment is the combo of closed-cell foam insulation, geothermal heating and cooling, and solar energy. Paybacks are in the 5-10 year range on the initial cost difference between these and more conventional insulation, heating/cooling and electric system installations, but the paybacks can be massive. If you consider the life of these systems is 25 years or more and they pay back in 10 years or less, theres a good 15 years of 70% to 85% energy savings vs. conventional.
I recently did the numbers on a new beachfront home in southern New Hampshire. It showed there would be a cost savings of $125,000 over the life of these systems! Now thats what you call green building! However, youll need to live in your castle for the 25 years if you want to achieve these results. The question of whether youll get a premium when you sell is still left up to the market, unfortunately.
Tom Frangos, President