Do Home Renovations Boost Home Value?
Home renovations and remodeling projects are just about as hot as the housing market! That’s probably because most homeowners are eager to make the most of a still-strong market and boost their home’s value.
It’s a nationwide phenomenon. Homeowners from coast to coast are racing to upgrade, improve, and update their property – all in hopes of ramping up their home’s valuation.
Regions Bank conducted a national homeowners survey. It found that almost half of American homeowners are planning to renovate their houses to boost their value within the next year. That’s up 7% from last year.
Homeownership and renovations go hand in hand. It makes sense for people who are planning to stay in their home long-term and makes sense for owners who are getting ready to sell. A good remodeling job will improve the living environment, help maintain the home, and should add to the home’s value.
Most renovations will increase a home’s valuation to some degree. But does that translate into added equity? Will a renovation increase the home’s valuation by more than it costs to complete it?
Not so much.
Several financial and real estate industry reports have shown that most home renovations don’t create more value than they cost the homeowners. And to make things worse, in many cases when renovating a house can make it more difficult to sell.
Of course, maximizing the value in order to sell isn’t always what homeowners are concerned about. Many are primarily concerned with refining their personal living spaces. But this isn’t good news for anyone who wants to recoup their financial investment or make their home highly attractive to buyers.
Home renovations shouldn’t be done based on looks alone. It’s important to know what you can expect to recoup – whether or not you plan to sell.
Would you invest in a hype or ‘meme’ stock without considering the company’s financials? Or buy the nicest looking car without evaluating how long it will last or what repairs you might have to make?
Hopefully not. Likewise, you’ve got to know which home improvement projects can deliver the biggest bang for your buck before you get started. This is a quick guide to what kind of value you can expect to get back from popular home renovations.
What kind of home renovation projects create the least home value?
Let’s start by looking into what’s not financially worth it. Last year, housing industry intelligence platform Zonda Media released its 34th annual Cost vs Value report.
This report detailed the value generated by the top 22 home renovation projects. It gave the cold, hard truth about what some of those renovation projects deliver in cost recovered value.
With the lowest ROI:
- Mid-range master suite addition: 55%
- Major upscale kitchen remodeling: 54%
- Mid-range bathroom addition: 53%
- Upscale bathroom addition: 53%
- Deluxe master suite addition: 48%
With a higher ROI:
- Garage door replacement: 94%
- Manufactured stone veneer: 92%
- Minor kitchen remodeling: 72%
- Fiber cement siding replacement: 69%
- Vinyl window replacement: 69%
According to these statistics, the average homeowner only recovered around 66% of their reno costs in additional value. Many recovered only a fraction of what they had spent.
It’s difficult to successfully track the total cost of home improvements, upgrades, and updates onto the selling price.
Buyers just aren’t willing to bear the entire financial burden of existing work done by someone else. They take it for granted that a home should be in good condition, are prone to find faults with a home no matter what you’ve done, and prefer to personalize their future living space to their own tastes.
This is why changing something on the exterior – like the garage door or the siding – is statistically proven to boost a home’s value more than putting in a swanky new master bedroom suite.
So, if you’re looking to create the most home value possible, it’s best to stay away from these kinds of renovation projects.
Which home renovations create the most home value?
So, where does the value lie? We’ll have to look to get clued in by inside information from the National Association of Realtors and the National Association of the Remodeling Industry.
According to their joint 2022 Remodeling Impact Report, there are only two projects proven to boost a home’s value beyond the cost.
- Hardwood floor refinishing: ROI of 147%
- Hardwood floor installation: ROI of 118%
Yes, that’s right. Hardwood flooring projects are the only remodeling and renovation work that create more value than they cost!
Simply refinishing and polishing an old beaten-up wooden floor is the most profitable upgrade a homeowner can make. A brand-new installation might cost a bit more, but it’s still financially lucrative for homeowners who choose to invest in it.
That shouldn’t be a surprise. Hardwood floors are attractive to a broad group of potential buyers. They reflect classic taste, are healthier to live with than carpets, and are incredibly durable.
It’s a neutral choice that caters to the cost-conscious, value-minded, those with upscale tastes, singles, young buyers, families with children, etc. It’s hard to find a buyer who doesn’t like hardwood flooring. And if one doesn’t – it’s easy to cover it up with their preferred flooring type.
Hardwood has universal appeal as a high-quality, long-lasting home finishing. And this makes it the single remodeling project that homeowners can rely on to create more value than it costs them.
Providing America’s homeowners with affordable, hardwood flooring
Footprints Floors is a home care franchise dedicated to providing our customers with affordable wood flooring.
We focus on hardwood floors because that’s the only home improvement service statistically proven to generate home equity. It’s beautiful, ecologically responsible, lasts long, and boosts a home’s value.
We’re proud of our work and the Franchise Owners who carry out our mission every day.
Please visit our franchise website for more information on what we stand for and how to start a flooring company.