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The best home renovations to increase a home’s value are quite unexpected. It’s easy to get caught up in dreams of gourmet kitchens and extravagant master baths. But these typically only return about 10 to 15 percent.
That’s what Alan Ilyaich, owner of Eco Choice Windows & Doors, told us when we asked the question on most homeowners’ minds: Which home renovation is going to give me the biggest return on my investment?
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Home renovations are hot
Take it as a sign of our times. Binge-worthy house flipping and home-improvement shows are popping up on almost every channel and streaming service. Homeowners are interested in fixing up and renovating – not just for entertainment but for improving their homes’ values.
Despite challenges like lockdowns and supply chain issues, in 2020, Americans invested $420 billion in remodeling projects. With many contractors noting an increase in demand since the start of the pandemic, high demand for remodeling is expected to continue through 2022.
7 home renovations that are worth the cash
Here the old saying, “You have to spend money to make money,” holds true. Jett Hovell of Fantastic Handyman, who’s completed several successful renovating jobs, says that when it comes to increasing your home’s value, it’s important to remember that the market you’re selling in plays a big role in the price of your home. “What I would suggest is firstly you talk with an expert on the matter. They know the market, and they will help you best,” he says. Your loan officer can help answer any questions and refer you to a contractor they’ve worked with in the past.
Get in touch with a loan officer to find a loan program that’s right for your reno. Cornerstone lends in almost every state.
When you’re ready to start your project, consider home renovations with the greatest ROI potential:
Refinishing existing floors and having new wood floors installed make the top of the list for greatest returns. In addition to increasing the value of their home, many homeowners noted an increase in the livability of their space.
Average Cost: Hardwood Floor Refinish – $3,400
Average Return: 147%
Average Cost: New Wood Flooring – $5,500
Average Return: 118%
Improving a home’s insulation can make it more comfortable to live in and increase energy efficiency. Good insulation provides resistance to heat flow, reducing heating and cooling costs for the owner. With Americans seeing their electric bills rising 4% on average (and up to 15%), compared to last year, energy savings are more important than ever.
Average Cost: Insulation Upgrade – $2,500
Average Return: 100%
In addition to safeguarding your home’s value, replacing the roof can improve ventilation. This can mean less build up of heat and moisture, protecting your home from mold and other unwelcome guests. Many modern roofing materials can also increase energy efficiency, just another opportunity to save on energy costs.
Average Cost: New Roofing – $12,000
Average Return: 100%
Swapping out a worn-out garage door with a new one instantly improves a home’s curb appeal. A new garage door can also offer quieter entry and exit from the garage, and improved home security.
Average Cost: Garage Door – $2,000
Average Return: 100%
Remodeling an unfinished basement can have a large impact on a home’s living space. Need an extra office space? A playroom for the kids? A home gym? Look no further than the basement. Other benefits of a finished basement include a lower chance of mold and pests.
Average Cost: Basement Conversion to Living Area – $57,500
Average Return: 86%
On home improvement shows, the kitchen is often the star and it’s not hard to see why. The heart of the home where you cook, eat, and gather as a family is high on many homeowner’ priority lists. And you can’t deny, some of those backsplashes are swoon worthy. Of those who renovated their kitchens, 43% reported better functionality and livability in their daily lives.
Average Cost: Complete Kitchen Renovation – $80,000
Average Return: 75%
Leaky faucets and pink fixtures, be gone. Updating a bathroom can breathe new life into your space. On top of creating a beautiful aesthetic and more functional space, updating bathroom fixtures offers yet another chance to save on energy and costs. From water-saving toilets, to LED lighting, to energy-saving ventilation fans, the options are many.
Average Cost: Bathroom Renovation – $35,000
Average Return: 71%
Return on Happiness
While renovations are known to have a positive impact on the value of the home, what about the impact on the homeowners? The 2022 Remodeling Impact Report by the National Association of Realtors looks at this very question, exploring the cost recovery for various renovation projects and assigning each a Joy Score based on consumer feedback. Categories contributing to the Joy Score include: an increased desire to be home, an increased sense of enjoyment, and a sense of accomplishment when thinking of the project.
Painting, adding a home office, refinishing or installing wood flooring, renovating a closet, and updating insulation all scored at the top of the pack, each earning a 10 out of 10 joy score.
To get the most out of your home reno budget, talk to your lender first. A reverse mortgage for retirees could provide you with extra cash for necessary renovations. Homebuyers may also be eligible for the HomeStyle® Renovation mortgage, a loan program that covers renovation costs and is designed for buying fixer-uppers. Eligible buyers can use the HomeStyle® Renovation loan for interior and exterior upgrades, including fences, decks, landscaping, and pools, totaling up to 50 percent of the as-completed property value.
Want to know if you can afford to renovate? Reach out to us today to discuss your options.
Ready to renovate? Let your lender help you find a loan program that offsets the extra expense.
*Provided by the Provided by the 2022 Remodeling Impact Report
For educational purposes only. Please contact your qualified professional for specific guidance.
Sources are deemed reliable but not guaranteed.