Bay Area Home Renovation in the Works? What to Know Before You Begin

The region around San Francisco is one of the highest-priced home markets in the world, and it costs more to renovate here, too. However, your renovations can also have a much higher payoff when it’s time to sell your home.

Renovation can be a wonderful experience that elevates the value of your property and your enjoyment of your home for as long as you’re in it… It can also become a nightmarish drain on your finances that drags on for months or even years.

Of course, as with life, there are no guarantees of success when you decide to renovate or remodel your Bay Area home, but a bit of knowledge and planning will help make the process as smooth and beneficial as possible.

BAY AREA HOMES COME WITH GREATER COSTS AND HIGHER RETURN ON INVESTMENT (ROI)

Homes and renovations cost more in the Bay Area. That said, those higher costs can also add up to a greater return on your investment when it’s time to sell your Bay Area home.

Remodeling Magazine’s annual Cost vs. Value report looks at national and regional averages and return on investment for popular home remodeling projects in metro areas across the country. Costs of every remodeling project in San Francisco exceed the national averages, but so do the returns. For example, nationally, replacing a garage door costs $3,470 and recoups about 98 percent of the cost at the time of resale. In San Francisco, it costs $120 more and pays back 120 percent! Other projects that Remodeling reports the highest ROI for the Bay Area are:

  • Adding manufactured stone veneer, which recoups about 125 percent of its cost.
  • A minor kitchen remodel, which pays back nearly 93 percent.
  • A wooden deck addition, which recoups 89 percent.

UNIQUE REMODELING CHALLENGES

The Bay Area, and especially San Francisco, has a wealth of historic homes and neighborhoods that all enhance the unique character of the area. But come renovation time, this historic character can lead to additional headaches.

The City of San Francisco stringently protects its historic architecture with many layers of codes and permits. In fact, a city brochure published in 2006 to help homeowners navigate the permitting process noted it was actually easier to list the 18 items that didn’t require a permit, as there were so many projects that required permitting.

If your home is historic, your remodel will almost certainly need to go through a detailed planning and review process by city building officials. San Francisco and other local city codes seek to protect the historic nature not only of individual homes, but of entire neighborhoods as well, so if your 10-year-old home is surrounded by structures that are 50 or more years old, you may be held to the same remodeling standards as your neighbors, even if the structure itself isn’t historic.

An architect and/or contractor that does a lot of business in the Bay Area will be able to help you understand remodeling and building codes.

You can also find information on the Department of Building Inspection’s website.

PROP 13 AND AGING-IN-PLACE RENOVATIONS

Proposition 13 in California limits the annual increase in property tax for a home to 2% per year. As a result, many folks are able to age in place, but changes to the home are often necessary (such as ramps, adjustments to countertops, even installation of chair lifts, and the like). Renovations will increase the value of the home and therefore the property taxes. Homeowners will want to compare the property tax increase related to the home improvements vs. the alternative of moving into a care center.

BEFORE YOU BEGIN

The clients whom I’ve seen reap the full benefit of their Bay Area home remodel are the ones who went into the process knowing exactly what they wanted to achieve, how much it would cost and how they would pay for it. They also went in knowing there would likely be extra expenses and delays they hadn’t foreseen.

Before you commit funds and hire a contractor, first consider why you’re embarking on a Bay Area home renovation. Is your home a starter house that you’re trying to stretch into a more long-term home? If so, it might require extensive work that will be costly, and gaining approval could be difficult. You might be better off making basic strategic improvements to increase the value of the house, before selling it and moving into something closer to your ideal home.

If you want to improve your starter home with an eye toward maximizing its sale price, refer to resources like the Cost vs. Value report to see which improvements will boost your resale value the most. If you’ll be staying in your home for a long time, then you can probably afford to do renovations that will make the home more livable for you, rather than allowing resale value to drive your decisions.

Ready to start thinking about your financial decisions a little differently?

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