You don’t have to tell Charisse Workman about the housing bust. As a real estate agent, the 38-year-old Charlotte, North Carolina, resident has had a front-row seat. But when Workman and her husband, Westley, looked at the unfinished basement of their two-story craftsman home, they saw not only untapped potential but a way to increase their home’s value.
The space was basically a modern-day cave, “unexcavated, and full of nothing but dirt and cinderblocks,â€ remembers Charisse. So the couple took the plunge in 2007 and transformed the basement into a multipurpose space. With their 4-year-old son, Westin, the couple now uses it as a “playroom, an extra bedroom, and TV area,â€ says Charisse. There’s even a full kitchen and bathroom, so visiting guests have a suite all to themselves.
The project set them back $160,000, partly because they added 1,200 square feet of usable space. However, the renovations paid off: Their $300,000 home, purchased in 2003, was recently appraised at $640,000. “It bothers me when people only improve their homes when they plan to sell,â€ says Charisse. “I want to live in it when it’s nice, too. And then when we’re ready to sell, there’s not much we’ll have to do to it.â€
The Workmans aren’t alone in wanting to stop the home value skid. Look at the latest housing numbers, and it’s not hard to figure out why. As of this writing, the S&P/Case-Shiller housing index, which samples prices in 20 cities around the country, is cratering by 19% a year–an all-time record.
But take heart. Even in the worst housing market in years, targeted renovation projects can help boost the value of your home. They’ll not only help your home sell (and at a better price) down the line, but they’ll improve your quality of life in the meantime.
Ironically, it might even be a great time to undertake a renovation. “You can get an awesome deal right now,â€ says Sonia Booker, real estate entrepreneur and author of Real Estate & Wealth: Investing in the American Dream (Amber Communications Group Inc.; $15.95). “You can almost write your own price, because so many contractors are starving for work.â€
Move cautiously when renovating in a down market, though.Â “You have to be smart about it,â€ says Mark Foreman, former vice president and liaison to the committees for the National Association of Realtors and owner of Cornerstone Capital Mortgage and Real Estate Services in Fairfield, Connecticut. “In this market, there’s still a lot of uncertainty. But if there are two homes in the neighborhood selling for $300,000, buyers are always going to want the one in better condition.â€
When choosing your renovation project, think about things that will appeal to absolutely every buyer who walks in. Everyone will be attracted to modern, functional kitchens and bathrooms, for instance. But in a tough economy, nonessential elements such as sunrooms have become an extraneous luxury item, and home offices have very limited appeal. “If a buyer doesn’t need those things, they become completely useless,â€ says Alfano. “They might even hurt you, because buyers might think of those places as lost space that they’ll have to spend a lot of money to fix.â€
This article originally appeared in the June 2009 issue of Black Enterprise magazine.