Remodeling your house can improve your quality of life and enjoyment of your home for years to come. It can also require a sizeable financial investment. Before launching into a major project, take time to assess your priorities from more than one perspective.
Do you need or want features that are absent from your current house? Are you planning to sell your house eventually, but not immediately? Could you use a little guidance on which projects will add the most value to your home?
Remodeling Wisely: Know the Trends
Similar to fashion and decorating, remodeling projects follow design trends that vary from year to year and location to location. For example, an excellent investment in resale value for a central California home may be a losing proposition for a home in southern Ohio.
According to Remodeling magazine’s 2018 Cost vs. Value Report(link is external), it costs just over $1,500 to replace an entry door with a steel door in Sacramento, California, increasing the home’s resale value by nearly $2,700. The California homeowner would gain roughly 70 percent on their renovation investment.*
The same upgrade on a home in Cincinnati, Ohio costs just under $1,500 but only improves the home’s resale value by slightly over $1,000. In other words, the Ohio homeowner would experience a loss of nearly 30 percent on the upgrade.
Return on Investment (ROI) Isn’t Always About Resale Value
Most homeowners embark on renovations and upgrades because they need something: a second bathroom, a better kitchen layout, a roof that doesn’t leak. These investments may be worthwhile, regardless of eventual resale value. For example:
- Adding a bathroom may take the edge off morning stress while your family is getting ready to leave for the day and be worth the price no matter what it costs! Nationwide average = 55 to 60 percent ROI at resale.
- A better kitchen layout requiring minor remodeling work may mean you’ll cook at home more often, which could provide health benefits and, by eating out less, improve your monthly budget. Nationwide average = over 80 percent ROI at resale.
- Replacing a leaky roof preserves the value of your home, prevents health issues like mold growth, and reduces the likelihood of even costlier future repairs. Nationwide average = 68 percent ROI at resale.
Although you can’t base your decisions solely on ROI, it’s good to know the bottom line and aim for improvements that will contribute to your home’s value.
How do homeowners react to completing a remodeling project? According to a remodeling impact report from the National Association of REALTORS® (NAR), 36 percent of owners report better functionality and livability as the single most important result of their remodeling projects, while only 17 percent cite beauty and aesthetics.
NAR also ranks and compares the projects that are most appealing to buyers and most likely to improve a home’s resale value. The top three items on both rankings (the interior and exterior lists of renovation projects) are viewed as equally appealing to buyers as they are for resale value:
Top 3 Interior Renovation Projects
- Complete kitchen renovation
- Kitchen upgrade
- Bathroom renovation
Top 3 Exterior Renovation Projects
- New roofing
- New vinyl windows
- New garage door
Staying Put May Be The Best ROI
Adding a master bedroom suite is a serious cash investment that is only expected to return 48 to 57 percent, nationwide, when it’s time to sell the home. However, that investment may eliminate your need to move to a larger house. In that case, you get ahead by staying put.
Living in a home you love is the best ROI. Before undertaking your next remodeling project, consult the Cost vs. Value Report(link is external) for more details on the best remodeling projects for your location.
* Note: All return on investment rates cited in this article are based on the 2018 Cost vs. Value Report(link is external).