Most homeowners invest in one or more home improvement projects while living in their home, whether to update, repair, or add beauty, function, or living space. Some projects return more value for the cost than others. Every year, home remodeling and real estate industry experts look at all types of home remodeling projects, including the national average cost of the project, and compare the cost to the value returned on that project when the homeowner sells their home.
Remodeling’s 2017 “Cost vs. Value” report* indicates that the payback for the most typical home improvement projects equates to an average of 63.5% for each dollar spent on the improvement. Most notably, the report finds, projects that enhance curb appeal returned the most value on the investment. These improvements included changes or replacements to windows, siding, and doors. Individual high-value projects – but also relatively lower in price – include insulating a home’s attic, steel door replacements, and adding exterior stone veneer to the home.
Other home remodeling projects that showed an increase in value included some of the more expensive ones: adding a second story to a home, making a grand front entrance, adding a family room, and remodeling the master bedroom and/or master bathroom to reflect a more upscale style and design. Some improvements, while they may seem like a good idea at the time, lose value as situations change. For example, the value of a home backup power generator has a higher value if the home is being sold recently after a major storm event. The more time that passes without a need to use the generator, the lower the return on the initial investment.
You may wonder if any project has a 100% or greater return on the investment. The answer is: it depends. It depends on the project type and the geographic market where the home is located. The 2016 cost-to-value ratio on a remodel done to a home in the mid-Atlantic states (PA, NJ, NY) was 56.7%, just slightly below the national average return of 58%–66%. Other considerations to keep in mind involve understanding if the remodeling project is considered midrange or upscale. The scope of work involved, how complex the project is, and the quality of the products used in the renovation determine that designation.
Looking ahead, mortgage rates are expected to rise, which may mean that more people will remain in their current home than move. Instead of searching for their dream house, homeowners will instead renovate where they live, and enjoy the updates that have been designed and installed to meet their unique tastes.
Sovereign Construction Services is available to discuss any type of home improvement project you may be considering. We will explain all your options and help you determine where you’ll get the best return on your home improvement investment. Call us today at (610) 639-2986.
*The complete Remodeling report can be found here: www.remodeling.hw.net/cost-vs-value/2017/