Which Home Renovations Get the Best Returns?
CRASH! THUNK! BOOM! The loud clamor jolts me out of my patio chair, where I am trying to write this column. The dogs startle from their naps. “Did you hear that!?” their expressions beg.
“I know it sounds like 25-cars and a locomotive slamming into a block wall,” I reassure them, “but it’s just the roofers next door.”
We settle back down. A few minutes later, KABOOM! We jump. This scene repeats all morning as the hardworking roofers detach old clay roof tiles, and shove them by mounds into a Dumpster 15 feet below. It is not peaceful.
However, according to a report that is literally in my hand, it will be worth it. As it happened, I was writing this column about which home improvements deliver the most bank for the buck. The 2022 Remodeling Impact report, out from the National Association of Realtors, looked at the best outdoor and indoor improvements homeowners could make to get most, all, or more of their money back. Researchers surveyed remodelers to find the average costs for projects, and Realtors to find out how much each improvement would add to the home’s resale value.
Topping the list of outdoor projects, delivering a 100 percent return on investment: A new roof.
This is small consolation for my neighbor who keeps apologizing for the inconvenience, including the roofer’s construction truck blocking our driveway.
“Don’t worry about it,” I assured her, yelling over the commotion. KERBAM! “I will get you back.”
“I’ve been dreading this, but didn’t know it would be so bad,” she said. CALUMPH!
“What? Can’t hear you!”
“I’m so sorry! It’s a nightmare,” she hollered.
“You’ll be glad,” I assured her, and meant it.
“Why does a new roof top the list?” I asked, Jessica Lautz, NAR’s vice president of demographics and behavioral insights and one of the report’s authors. “I mean, no one drives up to your house and says, ‘I love your roof.’”
“Homebuyers know that replacing a roof is a costly, messy, loud, dirty, miserable job, so will pay for that,” she said. Another good bet is a new garage door, which can boost curb appeal, improve insulation, and also return all your investment.
As for indoor improvements, the top spot goes to hardwood floors. Refinishing the ones you have returns an average of 147 percent of the cost, while installing new wood floors results in an average return of 118 percent. Though a decidedly unsexy improvement, new insulation delivers a 100 percent average return, plus the energy savings.
If you’re looking for more to do, finishing an attic or basement can result in a 75 to 86 percent return, respectively, while kitchen renovations ─ the selfish reason I was interested in this report, so I could secretly build a case to convince my husband ─ returned between 67 percent for a modest upgrade (new counters, new appliances, refreshed cabinet fronts) and 75 percent for a complete renovation (new layout, new cabinets, added island, plus the above).
Separately, Groundworks, a basement remodeling company with offices throughout the country, reported that a modest kitchen remodel provided an 81 percent return. I’m going with that.
Though the NAR report didn’t look at lower-cost projects, those can pay off handsomely. New landscaping, good lawn care, and a freshly painted front door can boost a home’s sale price well past the cost of the effort. Depending on the color, meaning don’t do anything crazy, painting your home’s interior can net a 107 percent return, according to Groundworks, which is probably why 63 percent of Realtors recommend their sellers paint their interior walls, Lautz added.
Of course, real life doesn’t come down to a single survey and simple math. To get more out of your home than you put in, you need to make the right renovations on the right home in the right place at the right time. Here’s what else to consider before you get out the jackhammer:
· Necessity. Any value your home improvement adds depends on whether the project needed to be done. Now I know, your definition of needed and your partner’s definition may differ. But, in general, improvements add value when they upgrade old, worn and outdated materials, or improve livability. So, if you tear out a new kitchen and put in another new kitchen, you probably won’t gain much.
· Taste. How much value you add assumes that what you do looks better than before, and that others agree. Again, your idea of looks better and someone else’s may vary. Consult magazines, homes in your area, a designer or a Realtor if you’re unsure. In general, don’t be too weird.
· Neighborhood. What adds value to a home in one neck of the woods may be sunk money in another. Ask a Realtor who knows your area whether the market will support the improvement you’re considering.
· Age and condition. The NAR report was based on houses in good condition built after 1981. Older homes are more likely to have hidden issues lurking behind walls and cost more to remodel because owners will have to bring them up to current building codes. In other words, putting a gleaming new bathroom in a dilapidated house is like putting a bow on a burro.
· Joy factor. Because home improvement is not all about the money (Right? RIGHT?), the NAR report also calculated the joy factor, which tended to be 10 out of 10 for most projects. Though you may not get back all you put in financially, don’t overlook the value of enjoying the improvement yourself.
CRASH! THUNK! BOOM! Sounds like money to me.
CAPTION: Bank for your buck ─ Home improvements such as refinished or new wood floors can return all or more of your investment, while homeowners can recoup 75 percent on a remodeled kitchen, according to a report from the National Association of Realtors. Photo courtesy of Dreamstime.