Cost vs Value

[The Bob]

Methodology​

Cost. To estimate costs, the Cost vs. Value (CVV) team first set a baseline cost by creating a price index for each project category. These indices were based on specific building-product data from the Bureau of Labor Statistics (BLS), including the Consumer Price Index (CPI) and the Producers Price Index (PPI), as well as data from the Personal Consumption Expenditures (PCE) price index, produced by the U.S. Bureau of Economic Analysis (BEA). We also used BLS data to account for changes in average wages for installers from 2019 to now, and accounted for the change in overall inflation within the building product categories. Each of these was given a proportional weighting to establish a reliable national baseline that accounted for changes from 2019 (pre-pandemic to avoid anomalies created over the last few years) to present.
To define how prices varied for local markets, the CVV team partnered with Verisk (Nasdaq: VRSK), a leading global provider of predictive analytics and decision-support solutions, who provided us with building cost data for each of the 23 remodeling projects drawn from XactRemodel, Verisk’s remodeling estimating solution.
Value. Resale value data for each project was aggregated from estimates provided by an online survey conducted by Zonda to over 6,000 Realtors working in cooperation with the National Association of Realtors (NAR). Survey respondents were provided with project descriptions, photos and illustrations, plus construction costs and median home prices for each city, and asked “What value does each of the 23 remodeling projects add to the sale price of a home?” Respondents were instructed to avoid making judgments about the motivation of the homeowner in either the decision to undertake the remodeling project or to sell the house.

https://www.remodeling.hw.net/cost-vs-value/2023/

 

[Amy Perkins]

Value can fall short of cost for things like pools, solar panels, but can often be higher for kitchen and bath remodels, wood flooring upgrades, new roofing and paint. We always need to understand the concept of entrepreneurial profit.

 

[Tom D]

yea, that cost equals value is kinda interesting back up. it comes out ever year.

 

[BRCJR]

I believe in the phrase, "cost does not always equal value" because sometimes it can.

The vast majority, I hear, say, "cost does not equal value", which can be wrong.

 

[Zoe]

Cost estimate is only an indicator and sometimes is the very best indicator of market value.

 

[Zoe]

Sometimes depreciated cost estimate is the only thing you can hang your hat on. Only indicator you got. Needs to be real property or personal property. Make that clear.

 

[Zoe]

Real property vs personal property:

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[Amy Perkins]

I believe in the phrase, "cost does not always equal value" because sometimes it can.

The vast majority, I hear, say, "cost does not equal value", which can be wrong.

It can of course, but not always

 

[BRCJR]

It can of course, but not always

I suppose you were just confirming my statement.

 

[Amy Perkins]

I suppose you were just confirming my statement.

Yes, it is surprising how accurate it can be for course of construction appraisals.