The Financial Reality of Remodeling: Why Costs Are What They Are

One of the most common questions homeowners ask when planning a remodel is also one of the hardest to answer simply:

“Why does remodeling cost so much?”

For homeowners investing in kitchens, bathrooms, additions, or whole-home projects, especially along the Southern Maine coast, the answer isn’t driven by a single factor.

Remodeling costs are shaped by labor economics, material pricing, regional market conditions, and the reality that quality construction is both skilled and time intensive.

Understanding the financial side of remodeling helps homeowners make better decisions, set realistic expectations, and feel confident in the investment they’re making.

Why Remodeling Costs Have Risen in Recent Years

Construction and remodeling costs have increased steadily over the past several years, and industry data confirms what homeowners and builders alike are experiencing.

According to the National Association of Home Builders (NAHB), construction costs now account for over 60% of a home’s total value, with labor and interior finishes representing a significant share of that number. Skilled labor shortages, higher wages, increased insurance and compliance costs, and more complex building codes/standards all contribute to higher project costs, especially in professional remodeling.

Unlike new construction, remodeling requires working within existing structures. That means careful demolition, structural verification, coordination with multiple trades, and problem-solving as conditions are uncovered. These realities make remodeling inherently labor intensive, regardless of who supplies the fixtures or finishes.

Why Supplying Materials Doesn’t Reduce Costs Proportionally

Many homeowners understandably assume that providing fixtures, tile, or finishes should dramatically lower the total cost of a project. In practice, materials often represent only 15–30% of a high-end bathroom or kitchen remodel.

The remaining cost is driven by:

• skilled labor across multiple trades

• project supervision and coordination

• waterproofing, prep work, and structural modifications

• code compliance and inspections

• sequencing work to avoid failures or rework

  
  

This aligns with NAHB data showing that labor and construction processes, not finish materials alone, are the primary cost drivers in residential remodeling.

What Cost vs. Value Reports Really Tell Us

Each year, the Journal of Light Construction publishes its widely referenced Cost vs. Value Report, which compares the average cost of remodeling projects with the resale value they return in specific regions. For Southern Maine, the Portland, Maine region provides the closest market comparison.

The 2024 report shows that:

• Upscale kitchen remodels typically recoup around 50–60% of their cost at resale

• Upscale bathroom remodels often recoup approximately 45–60%

• Exterior projects and smaller upgrades may show higher percentage returns

These numbers are frequently misunderstood. A lower resale recoup percentage does not mean a project lacks value. It reflects how real estate markets appraise interior improvements relative to overall home value.

Why ROI Isn’t the Whole Story; Especially for Second Homes

For many homeowners, particularly those with second homes along the Maine coast, resale is not the primary motivation for remodeling. According to the National Association of REALTORS® Remodeling Impact Report, kitchens and bathrooms consistently rank among the highest projects for homeowner satisfaction, even when resale return is not the main goal.

The report introduces the concept of a “Joy Score,” which measures how much enjoyment homeowners get from a completed remodel. Kitchens and bathrooms score exceptionally high, often near the top of all remodeling categories.

This highlights an important truth: The value of a remodel isn’t only financial—it’s experiential.

Daily comfort, improved functionality, durability, and pride of ownership are benefits that don’t show up on a resale spreadsheet but matter deeply to homeowners who plan to live in and enjoy their homes.

Why Professional Planning Matters Financially

One overlooked financial factor in remodeling is the cost of poor planning. Projects that begin without defined scope, verified pricing, and finalized selections are far more likely to experience:

• budget overruns

• change orders

• delays

• compromised design outcomes

This is why many professional builders emphasize pre-construction planning. Investing time upfront to define scope, coordinate trades, and establish accurate pricing reduces financial risk and leads to better outcomes for both the homeowner and the builder.

Remodeling as Asset Protection, Not Just Improvement

From a long-term perspective, remodeling is often less about increasing resale value and more about protecting an asset. Homes in coastal environments face unique challenges from moisture and humidity to seasonal occupancy, and high-quality construction plays a critical role in longevity.

Well executed kitchens and bathrooms help preserve a home’s condition, reduce future maintenance costs, and maintain competitiveness in high-end markets should resale ever occur.

The Bottom Line

Remodeling costs reflect real economic forces: skilled labor, time-intensive processes, rising construction standards, and market-driven material pricing. While industry reports like JLC’s Cost vs. Value provide useful benchmarks, they represent only one dimension of value.

For many homeowners, the true return on a remodel is found in daily use, long-term durability, and confidence that the work was done correctly the first time.

Understanding the financial reality behind remodeling allows homeowners to approach their projects with clarity, and to view quality construction not as an expense, but as a thoughtful investment in their home and lifestyle.

Property Essentials serves Southern Maine’s coastal communities—including Wells, Kennebunk, Kennebunkport, Ogunquit, York, and Cape Neddick—providing high-quality bathroom remodels built to last in coastal conditions. Our team focuses on clean workmanship, durable materials, and clear communication for both primary residences and seasonal second homes. If you’re planning a bathroom renovation and want practical guidance on cost, timeline, and design options, we’re here to help.