Would you pay more for a house with higher ceilings? I probably would, but I guess it depends. The ceilings in my home are a standard 8 ft. Would I have paid more if they were 9 ft? Probably. But what about 23 ft? No, that would be too high.
Someone asked me a question recently about the value difference of ceiling height, and I thought kicking around some ideas here could open up a great discussion. Anything else you’d like to add? I’d love to hear your take.
Question: What is the difference in value for ceiling height? For instance, 8ft to 9 ft, 9ft to 10ft, etc?
Answer: That’s a great question. On one hand higher ceilings are a more custom feature, so buyers are likely to pay more for them. This is particularly true for single story homes. However, there isn’t some sort of ceiling height market formula we can apply to every property because real estate adjustments are frankly going to be different depending on the neighborhood, price range, and market. We often hope to extract the value of one particular feature, but let’s remember many times buyers are actually looking at the entire package of a home instead of parsing individual features. In reality ceiling height is only one part of the package when it comes to buying a home. For instance, 10 ft ceilings sound like an asset, but if they’re found in a home with a terrible layout, they might not command a premium at all. So just because they are there does not make them inherently valuable. This underscores the importance of using an “apples to apples” approach when selecting comps, meaning the goal is to compare the subject property with homes that are overall similar so we get a sense what the market has been willing to pay for such homes. We might not find homes that are exactly the same, but that’s okay because we can use homes that are deemed overall competitive. Thus as an appraiser, rather than isolating my search for comps to just ceiling height, I would simply try to find other homes that represent a realistic comparison. If an Excel Jedi wanted to geek out and crunch numbers to try to prove a value difference, maybe that could be done with extensive research (sort of like Jonathan Miller measuring value by floor location in New York). But keep in mind how difficult that would be since ceiling height levels are not recorded in MLS or Tax Records (in Sacramento at least). Most of all though, buyers don’t bring measuring tapes to properties, which reminds us to think in terms of the total package.
Questions: How would you answer the question if someone asked you? Anything else you would add? What did I miss?
If you liked this post, subscribe by email (or RSS). Thanks for being here.
Volume (high) ceilings have always been desirable, but there is usually a cost issue. You might point to homes built 100 years ago with tall 12′ ceilings, but mostly those are the surviving mansions, not the bungalows. How do you value them? That part of the equation comes much later than location, size, number of bedrooms, baths, etc. and if we built a Zillow styled algorithm it would be a page long. Lets call it under the general term “quality” but in relation to the homes in the surrounding neighborhood. In Wilhaggin, 8′ ceilings are found above $1 mil as the homes are mostly 1960-1975, but there is often a vaulted room. In newer areas the bulk of homes you might show are 9-10′, including the production homes.
Excellent comment, Jeff. Thank you Sir. I agree this is a quality issue and often the result of what is built in the neighborhood during a particular era. I appreciate you saying that. We do see higher ceilings as a more “custom” feature in newer subdivisions too, but it’s rare to see just one home in the entire subdivision with these ceilings. It seems there are usually a couple models with vaulted ceilings rather than one random oddball.
I would see it as an overall quality issue and see whether I could find comparables in the same class. In some instances some buyers find it a negative in cooler climates due to heating costs, The higher ceiling “makes the room feel larger” is the most common comment from buyers, but I would again tend to lump it into overall quality.
That’s a great lump to make, Mark. I do the same. Sometimes when I see a 2-story home with 20′ high ceilings in the Living Room / Dining Area, I wonder how much extra it costs to heat the home. That could be an enormous cost. How much would that cost equal over 10 to 20 years?
I would estimate $5000+ over ten years on a 2500sf home.
That’s a big chunk of change or in practical terms a sweet vacation to Hawaii with the family. 🙂
In many spec home developments around my area, 9′ ceilings are available as an upgrade over the typical 8′ ceiling. In these developments (usually a step or two above entry priced), the builders have a specific line item cost that is associated with the upgrade. In one development I recently appraised, most of the homes were pre sold before building and most buyers had selected this option. This is an indication to me that, in this development, the typical buyer demands higher ceilings and is willing to pay the cost of this upgrade. In this case, the cost is likely close to the value or maybe even less than the value. However, like you said, it would definitely depend on the location and a type of property. An entry priced property would likely have a cost for high ceilings that exceeds value in my area.
Well said, Gary. This reminds us there is a value for it, and I see that in my market too. As I mentioned above, I would personally pay more for higher ceilings (though it really depends how much and how high). Now to support a value adjustment in the market? That is going to be very challenging unless we see examples of both as in your case. I would think as long as the cost is reasonable, buyers will pay for it. In this sense builders have to test the market to see what buyers respond to. In theory the market has been tested by the time the appraiser gets there…
This is a great question Ryan, but one I don’t think there is an easy answer to. As pointed out in a previous comment there are also going to be utility cost issues. This may be one of those features that would be good to discuss with a good number of real estate agents to see what buyers have told them. If 8 out of 10 buyers didn’t want this feature then knowing this might help the appraiser decided where they wanted to reconcile the final value.
Even though we may not be able to isolate an exact dollar adjustment amount, knowing the desires of the typical buyer may help us know what part of the value range may be reflective of the value of that feature.
Thanks Tom. There are some real data problems when it comes to tracking down the numbers. I like Gary’s example above, though I would be curious to see how higher ceilings do in the resale market. Buyers are often willing to pay certain amounts for a home when it is sold brand new from a builder. But what happens in the resale market a few years down the road when it comes to 8′ vs 9′ ceilings? That would be an interesting question to explore.
This whole conversation for me points to the importance of thinking like a buyer by considering the entire package. In fact, I’m doing that right now as I have a deadline to meet in coming hours.
As a rehabber, I don’t expect to get my money back for expanding the ceilings and would only do it if I already had to remove the ceilings to repair them.
I would expand the ceiling height and charge it to the marketing budget, just like adding windows to add more light I’d want the home to FEEL good when buyers walked in, and higher ceilings feel good!
So for me, it would be apart of marketing like staging or fresh baked cookies! ;))
Thanks Bev. I always appreciate your take as a rehabber. You have lots of knowledge to bring to the table. I wouldn’t expect a return on raising ceilings either. I’m so glad you mentioned that. Money can probably be spent in other areas to maximize value. This entire conversation underscores the importance of a floor plan and layout that works well. For instance, a house a few doors down from me was dialed in with a more open layout and even higher ceilings, and it helped the house sell at the top of the competitive market (or maybe a little higher than it should have in my opinion). 🙂
…yep, I would definitely open the floor plan before raising the ceilings. Great post as usually Ryan, thank you!!!
Thanks Bev.
To me high ceilings tell me when the home was built and it’s style. In Phoenix, you almost never see 9ft ceilings in the 1970s and before. (You did start to see cathedral ceilings in the living/family rooms in the 1970’s but 8ft in the other rooms.)
So you start to see high ceilings in homes built in the 1980’s. By 1990, most new homes have high ceilings. But a lot of other changes are going on with new homes at the same time – kitchens, master bedrooms and master baths are getting larger and backyards are getting smaller.
The high ceiling isn’t so valuable by itself but it’s a marker of the whole style of a home, a more “modern” home style.
Great examples, John. Thank you for sharing. I like how you said, “The high ceiling isn’t so valuable by itself but it’s a marker of the whole style of a home”. Nail on the head. Buyers are going to look at the total package of what is there and make a decision on what to pay. There are different expectations in different neighborhoods too. The tricky part becomes when a home in the 1970s does some remodeling and opens up the floor plan as well as raises some ceilings. Is that home more marketable and/or more valuable now?
A point was made in an earlier post that high ceilings add to the cost of heating a house. While this is true, here in Sacramento the major utility expense is not heating, but cooling. High ceilings allow the warm summer air to move upwards so it’s not trapped in the living area/level. This was a feature of stately, expensive older homes in the southeastern states (built before air conditioning was available). One reason high ceilings are desirable is because we associate them with grand houses and mansions. The ceilings of ‘Gone with the Wind; homes were very high, and tall double hung windows provided for cooler air to enter near the floor as the warm air flowed out the top of the open window. High ceilings don’t offer just an aesthetic enhancement, but they provide for natural circulation to reduce air-conditioning costs. I would bet the cost savings for 10’ ceilings over 10 years would not only pay for a trip to Hawaii, but another vacation to Europe.
Excellent comment, Patti. I appreciate your take here. You are right about utility bills – in my house at least. They are much higher in the summer when the AC is in full gear. I’m all for a trip to Hawaii or Europe. 🙂 Thank you again for a very thoughtful comment.
I feel compelled to compliment Patti’s comment on the beneficial properties of stately ceilings. We have all heard the appropriate critiques about heating cost, but the inversely proportional benefit of cheaper cooling is something I have never once considered, despite it being so utterly obvious in hindsight.
Thanks Kevin. That’s a great point.
Fascinating. I don’t see high ceilings on the universal abbreviation list, but there are things like Landfill view (bad?, What if it’s a nice hill, lol) and City view (good?, What if it’s a factory? lol)
Lets say, in Brooklyn, the base penthouse property has modern 12 ft ceilings throughout, but no private roof deck. There is a comp with same sqft on appraisal that has 9ft ceilings throughout , and a private roof deck. If appraiser subtracts 100k for not having private roof deck, what’s a reasonable amount to add for the 12ft ceiling difference?
Thanks Anthony. Ceiling height would be a really difficult thing to isolate in my opinion. Most of the time adjustments like this would probably be made in a real estate text book where the only difference between two units happens to be ceiling height. I suspect in the real world it would be quite difficult. As with all things, we would have to support the adjustments we say exist. In other words, if they are real, let’s show where the adjustments actually came from. The ideal would be to find other comparable sales with and without the features to help substantiate the adjustment. I wouldn’t guess about ceiling height in this theoretical example.