ReNews -- Remodelors Council News - 08/29/2006 (Plain Text Version)

Vince Butler CAPS, CGR, GMB
Remodelors^TM Council Chair
Clifton, Virginia

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In this issue:
NAHB Study Shows How Much Bathrooms Are Really Worth
Remodeling Market Slows, Maintenance and Repairs to Remain Strong
Golf for Remodeling Education
Remodelors Council in the News
NAHB Launches Consumer Newsletter to Feature Building, Remodeling Information
Fall Board Approaches, Have You Registered?
Remodeling Show Events
Look what the 2006 Sunbelt Builders Show has for Remodelers
UPS Offers Up to 30% Discount to NAHB Members on Shipping

NAHB Study Shows How Much Bathrooms Are Really Worth

Resulting from in-depth analysis by NAHB, builders and remodelers in suburban locations can now provide their customers with a fairly precise estimate of how much bathrooms add to the value of their homes.

Based on data from the American Housing Survey (AHS) and updated several times over the years, the NAHB model used to estimate the price effects of bathrooms “has consistently shown that an added bathroom has one of the strongest impacts of any home feature on single-family detached home values,” said NAHB economist Paul Emrath.

Looking at recently released data from last year’s AHS, the bottom-line results of the NAHB study reveal that a half-bath adds approximately 10.5% to a suburban home’s value and a full bath adds about 20%.

Conducted every other year by the U.S. Census Bureau and funded by the Department of Housing and Urban Development, the AHS surveys about 60,000 nationally representative housing units. The survey is used because it provides more detailed information on housing characteristics than any other national source, Emrath said.

“Having information on a variety of housing features is important when trying to control for other influences on house price and isolate the effects of a specific feature such as a bathroom,” he said. “As Nancy Wallace of the University of California at Berkeley, among others, has pointed out, a statistical model can only provide accurate estimates of the prices of various features if the model incorporates all the important features of a home.”

According to the AHS, a full bathroom has a flush toilet, either a bathtub or shower, a sink, and hot and cold running water. A half bath by definition has running water and only a toilet, bath or shower.

Balancing Beds and Baths

Emrath said the NAHB model suggests that home buyers tend to prefer a rough balance between the number of bedrooms and the number of bathrooms. Adding an extra bathroom increases the home’s value by a higher percentage when there are more bedrooms than baths.

“When the number of bathrooms is approximately equal to the number of bedrooms, an additional half bath adds about 10% to the home’s value, and converting the half bath to a full bath adds another, 9%, so one additional bath adds about 19% to the value,” Emrath said. When the home contains fewer bathrooms than bedrooms, “the percentage gains associated with an added bathroom can be somewhat larger.”

In a home that has only one bathroom, an additional half bath will increase the value of a standard two-bedroom home by 11.5%, a three-bedroom home by 12.0% and a four-bedroom by 12.5%. “The greater the disparity between beds and baths, the more there is to gain, in percentage terms, by adding an additional bath,” he said. “One way to interpret this is that when there is an excess of bedrooms over bathrooms, an additional bathroom makes the bedroom more valuable.”

Because the AHS doesn’t collect information on such features as whirlpool baths or multiple sinks, the extent to which the estimated value of an additional bathroom would in part include the value of these extra amenities has to involve speculation, he said.

For information that home owners can use to compare the actual cost of a bathroom addition to how much it will add to the dollar value of their home, click here. The data is broken down regionally — with California being separated from the rest of the West because its home prices are much higher — and by the square footage of the home and the number of bedrooms.

To access the NAHB House Price Estimator interactively online and experiment with various combinations of amenities to see how they change the value of a home, click here.

For more information, e-mail Paul Emrath at NAHB, or call him at 800-368-5242 x8449.