Where We Get the Numbers

The 2007 Cost vs. Value Report establishes cost-to-construct benchmarks for a set of common remodeling projects, then estimates how much of that investment will be recouped at resale in the current market.

Cost
Cost data for the 2007 Cost vs. Value Report come from HomeTech Information Systems (http://www.hometechonline.com/), a remodeling estimating software company based in Bethesda, Md. HomeTech regularly collects current cost information from a nationwide network of remodeling contractors and suppliers, and employs an adjustment factor to account for regional pricing variations. Construction cost figures include labor, material, subtrades, and contractor overhead and profit.

Over the last two years, we have completely refreshed the project specifications and estimating templates. This included clarifying dimensions, modifying material specs, and ensuring that special requirements (such as laying tile on the diagonal) were properly accounted for. In some cases, this process resulted in prices that are higher than what would be expected from price inflation alone. While such pricing adjustments affect year-over-year price comparisons, all of the values in the 2007 Cost vs. Value Report are based upon the refreshed prices which, we believe, are more accurate than ever.

Value
For each project, the value data (“cost recouped” in the tables) are aggregated from estimates provided by members of the National Association of Realtors. E-mail surveys containing project descriptions, construction costs, and median home price data for each city were sent to more than 100,000 appraisers, sales agents, and brokers. Survey respondents were asked to use this information to estimate the value that the remodeling projects would add to the house at resale in the current market, assuming that the project was recently completed. More than 2,700 surveys were completed, the largest response to date. Respondents were instructed not to make judgments about the motivation of the homeowner in either the decision to undertake the remodeling project or to sell the house. The survey was in the field for 8 weeks in July and August of 2007.