Home Improvement Return on Investment: Which Fixes Really Pay Off?
Home improvement return on investment should be top of mind even if you don't plan on putting your home on the market. Sure, you may simply want to update your kitchen, install energy efficient windows or add a deck because doing so will make you happy. But whether you want to simply enhance your home or if moving trucks are indeed in your future, it's a good idea to consider how much money you can recoup from home improvement projects.
Top Payback Performers
One useful resource to determine the best renovation value is the 2017 Cost vs. Value Report conducted by Remodeling Magazine, which shares the average costs of 29 remodeling projects and how much real estate professionals expect those jobs would increase a home's value if sold within a year of the work. The report can be broken down for 99 U.S. markets, but its national averages tell useful tales as well.
Some top national winners aren't likely to make you swoon. Can you really get excited about adding loose-fill fiberglass insulation in your attic? Perhaps not, but the report found it is the only project that generates a higher value than it costs with an average payback of 107.7 percent at resale. That means if you paid $1,343 for the insulation, agents predict the project would increase your home's value by $1,446. (It could cut down on your heating and cooling costs, too.)
Likewise, consider these national averages from Remodeling:
- Steel entry door replacement ($1,413): 90.7 percent of costs recouped
- Manufactured stone veneer, an alternative for siding and stone projects ($7,851): 89.4 percent of costs recouped
- Garage door replacement ($3,304): 85 percent of costs recouped
It's important to remember that many factors can affect how much value your projects retain. Your choice of materials comes into play, as does the amount of time that passes before you list your home - color trends and in-demand features change over time.
The cliche that location matters holds true. Remodeling notes, for instance, that New Englanders would recoup 56.5 percent of their costs for a $20,664 roof replacement, but the payback for the same priced replacement is higher for those in the Pacific region - 80.5 percent.
Seek Local Opinions
Since real estate agents spend so much time in the field, they can offer great insight about potential projects, even if you're not ready to list your home. You may be tempted to knock down a wall to create a more open floor plan, for example, and agents may tell you their clients are leaning away from that design. Agents can also offer tips on small changes that can have a meaningful impact, like which rooms should be repainted or which cabinet pulls should be replaced.
Lastly, remember that home equity loans and home improvement loans can help you finance an improvement project that can benefit both you and your home's next residents.