By Scott Dostal

There is no denying that when home prices rise, kitchen remodeling becomes a smart investment again. During the last week, you might have heard that demand for existing homes is up about 22 percent (on average) from a year ago. Inventory of available existing homes is up only 17 percent. What is more, home prices in U.S. markets are up about eight percent (on average).

customized cabinetry offers the beauty and practicality of custom cabinets and a fraction of the cost

In many markets, exiting homes that offer the most desirable features become the object of bidding wars, even bidding up the price of a home by as much as 10 percent over the listing price. Not only is it a good time to sell, it is also a good time to remodel in anticipation of selling in the future. According to HGTV, the top ten features homebuyers want in 2013 are:

1.  Central air conditioning
2.  New kitchen appliances
3.  A Walk-in Closet in the Master Bedroom
4.  Granite Countertops
5.  Hardwood Floors
6.  Ensuite master bathroom
7.  Kitchen Island
8.  Stainless Steel Appliances
9.  Eat-in Kitchen
10.  One or more fireplaces

Many homeowners were understandably reluctant to invest in home remodeling during the recent economic crisis. However, as the demand for existing homes rebounds and prices increase due to low inventory, the investment in home remodeling begins to make far more sense. In fact, remodeling increased by 12 percent in April alone. Of those remodeling in April, 54 percent said their reason for remodeling was to increase the value of their homes.

With half of the top features buyers want in homes related to kitchen amenities and features, the first room of the house to consider remodeling must be the kitchen. According to Forbes, the average cost of kitchen remodeling is:

                Low budget remodel                      $7,133

                Mid-range remodel                        $22,390

                High-end remodel                           $54,942

A more important question for many homeowners is how a kitchen remodel will affect the price of the home at resale. According to the remodeling industry, the cost vs. value assessment looks like this:

                Major kitchen remodel                 Cost: $53,931     Resale Value: $37,139    Recouping 69% of cost

                Minor kitchen remodel                 Cost: $18,527     Resale Value: $13,977    Recouping 75% of cost

HGTV estimates the impact on resale value of the home slightly higher at 80 – 105 percent of cost.

In terms of remodeling an existing space, the kitchen is typically the most expensive room of the house to upgrade. Enlarging the space adds further cost. What makes kitchen remodeling so expensive? In most cases, cabinetry and appliances account for more than half of the cost. Kitchen remodeling costs (on average) break down this way:

•   35% Cabinets
•   20% Labor
•   20% Appliances
•   10% Windows
•    5% Fixtures
•    3% Fittings
•    7% Other
  

Cabinets, as the largest portion of the kitchen remodel cost, are significant:

                High-end Kitchen Remodel cost                                $54,942 (average)   x  35%  =  $19,229.70
                Mid-range kitchen remodel cost                               $22,390 (average)   x  35%  =  $  7,836.50
                Low budget kitchen remodel cost            $  7,133 (average)    x  35%  =  $ 2,396.55

There are, of course, several grades of materials and workmanship in kitchen cabinets. There are also several ways to buy kitchen cabinets, including the pre-manufactured modular units now offered by some companies. Your choices will be limited, and units will come in “standard” sizes.

There is another way to buy high quality cabinets, get exactly what you want, and get custom sizes and features. What is more, they can be installed in your kitchen, with granite countertops, for as much as 60 percent less than the cost of the custom cabinets you might want. The process, called customization, takes high quality cabinets in standard sizes and a cabinetmaker resizes them to specification. They can also be fitted with organizational inserts, customized for refrigerated drawers, and used to create unique units for special items.

Home prices are rising, making kitchen remodeling a very smart investment for those thinking about selling in a year or two. With cabinet customization, you can have kitchen cabinets of higher value for lower cost, thus increasing the percentage of your investment you can recoup when you sell your home. You can increase the value of your home and increase the amount of the remodeling cost you will recoup when you sell your home.