Remodeling magazine’s 19th annual “Cost vs. Value Report” could give prospective home remodelers a cause for concern. According to the report, the cost of remodeling increased at the same time that the return on the dollars invested decreased.

Like the recent correction in the home sale market, the remodeling boom of recent years appears to be returning to more normal levels. It was an adjustment that was bound to happen.

Remodeling magazine made changes in the way they analyzed data for the 2006 report, which is thought to have contributed to the higher, yet more accurate, remodeling cost figures. Estimates of resale value are also thought to be more accurate in 2006 than in previous years. A record 2,188 members of the National Association of Realtors completed the magazine’s online survey.

Keep in mind that the valuations cited in the report are based on averages. In reality, factors like cost of finishes, the condition of the rest of the house and local market conditions can cause any given remodel project to deviate significantly from the average.

Still, the change from 2005 to 2006 in the national averages for remodeling costs and the amount recouped at sale is significant. For example, Remodeling magazine’s 2005 report put the national average cost of a minor kitchen remodel at $14,913. The resale value of the improvements was $14,691, or 98.5 percent of the cost. A minor kitchen remodel consisted of updating, not redoing the kitchen from scratch. Cabinet boxes were left in place; only the doors and drawers were replaced. Appliances, countertops and floor covering were updated with similar materials.

In the 2006 report, the national average cost for the same project was $17,928, up over $3,000, or about 20 percent, from a year ago. The resale value of the improvements also increased, but only to $15,278 — a 4 percent increase. The amount recouped couldn’t keep pace with the increase in renovation costs, so the return on the investment at sale was only 85.2 percent — a drop of 13.2 percent from a year ago.

According to the 2006 report, a major kitchen remodel returns even less on the investment. The national average cost of a major kitchen remodel was $54,241. The resale value of the improvements was only $43,602, or 80.4 percent of the cost.

HOME SELLER TIP: This report underscores the importance of remodeling with a long term perspective in mind. It doesn’t make sense to embark on a major kitchen remodel just before selling your home. You’ll recoup less than if you did a modified minor kitchen remodel consisting of painting and updating light fixtures, floor coverings and cabinet pulls.

In addition to national averages, the Remodeling magazine report gives statistics for remodeling costs and resale values for nine regions across the country. In some cases, there is quite a bit of variation from one area to the next. For example, for a minor kitchen remodel in the Pacific Region (Alaska, Calif., Hawaii, Ore., Wash.), the cost recouped was 106.4 percent. In the pricey San Francisco market, the percent recovered was 126.2. But, in the West North Central Region (Iowa, Kan., Minn., Mo., Neb., N.D., S.D.), the amount returned was only 73.4 percent of the cost.

The report covers 25 remodeling projects, and for the first time PDF files are available for the 60 cities that were surveyed. The report, as well as individual city reports, can be purchased and downloaded from

THE CLOSING: Before you take on a remodeling project, talk to local contractors for input on costs, and to a trusted realtor for information on how much you can expect to recoup when you sell.

Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.

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