Study says: Remodeling is not an investment!

On HGTV's hit series My House is Worth What?, real estate experts walk through homes that have undergone extensive renovations, reassuring the owner that that new luxury bathroom was actually a good investment and not just a self-indulgent waste of money.

But before you take out a home equity loan to redo a bedroom, consider the facts: Remodeling Magazine's Cost vs. Value Report 2008-2009 shows that not single renovation recoups the entire cost. A bathroom remodel recoups 74.6% and a major kitchen remodel will bring back 76%. Home offices are the big laggard, returning just 54.6%.

Does that mean you shouldn't renovate? Of course not! But you shouldn't delude yourself into thinking that it's an investment. If it improves your quality of life by enough to justify the cost and you can afford it, go for it!

But this brings up an interesting point: Given that the data suggests that remodeling does not add value to a home, why do the experts on My House is Worth What? say that it does? And how many people have wasted money renovating because of the optimistic forecasts made on that show?

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