5 Home Improvements that Pay Off—and 5 that Don’t

Posted on Jan 21 2016 - 12:42pm by Suzanne De Vita
#10

renovationFavorable economic conditions have long triggered investment in home improvements—more money, more upgrades—and progress on the housing front is set to spur the next wave of homeowner spending on both necessary and discretionary projects.

How should homeowners invest their remodeling dollars this year?  By and large, homeowners can expect to reap the highest returns on projects that cost relatively less, according to REMODELING magazine’s 2016 Cost vs. Value Report.

On a national scale, the top five projects with the greatest return on investment (ROI) in the report’s “midrange” cost category are:

  1. Attic Insulation (Fiberglass) (116.9% ROI)
    Average Cost: $1,268
    Average Resale Value: $1,482
  2. Manufactured Stone Veneer (92.9% ROI)
    Average Cost: $7,519
    Average Resale Value: $6,988
  3. Garage Door Replacement (91.5% ROI)
    Average Cost: $1,652
    Average Resale Value: $1,512
  4. Entry Door Replacement (Steel) (91.1% ROI)
    Average Cost: $1,335
    Average Resale Value: $1,217
  5. Minor Kitchen Remodel (83.1% ROI)
    Average Cost: $20,122
    Average Resale Value: $16,716

On a national scale, the top five projects with the greatest ROI in the report’s “upscale” cost category are:

  1. Garage Door Replacement (90.1% ROI)
    Average Cost: $3,140
    Average Resale Value: $2,830
  2. Siding Replacement (Fiber-Cement) (78.1% ROI)
    Average Cost: $14,520
    Average Resale Value: $11,342
  3. Window Replacement (Vinyl) (73.3% ROI)
    Average Cost: $14,725
    Average Resale Value: $10,794
  4. Window Replacement (Wood) (72.1% ROI)
    Average Cost: $18,087
    Average Resale Value: $13,050
  5. Grand Entrance (Fiberglass) (69.6% ROI)
    Average Cost: $7,971
    Average Resale Value: $5,545

On the whole, regional data mirror these national findings, but variations exist in markets abuzz with real estate activity. Homeowners in the Pacific region (California, Hawaii, Oregon and Washington), for instance, can expect to see six of the 30 projects analyzed in the report recoup over 100 percent of their cost.

At the other end of the spectrum are projects with the lowest returns on investment—improvements generally not in demand by the market.

On a national scale, the five projects with the lowest ROI in the “midrange” cost category are:

  1. Bathroom Addition (56.2% ROI)
    Average Cost: $42,233
    Average Resale Value: $23,727
  2. Backup Power Generator (59.4% ROI)
    Average Cost: $12,712
    Average Resale Value: $7,556
  3. Master Suite Addition (64.1% ROI)
    Average Cost: $115,810
    Average Resale Value: $74,224
  4. Deck Addition (Composite) (64.4% ROI)
    Average Cost: $16,798
    Average Resale Value: $10,819
  5. Major Kitchen Remodel (64.9% ROI)
    Average Cost: $59,999
    Average Resale Value: $38,938

On a national scale, the five projects with the lowest ROI in the “upscale” cost category are:

  1. Bathroom Addition (56.7% ROI)
    Average Cost: $79,380
    Average Resale Value: $45,006
  2. Master Suite Addition (57.2% ROI)
    Average Cost: $245,474
    Average Resale Value: $140,448
  3. Bathroom Remodel (57.5% ROI)
    Average Cost: $57,411
    Average Resale Value: $32,998
  4. Deck Addition (Composite) (57.7% ROI)
    Average Cost: $37,943
    Average Resale Value: $21,877
  5. Major Kitchen Remodel (61.5% ROI)
    Average Cost: $119,909
    Average Resale Value: $73,707

The 2016 Cost vs. Value Report compares, across 100 markets, the average cost of 30 popular remodeling projects with their average value at resale one year later. Average resale value is calculated based on estimates provided by real estate professionals. View the full report, including project descriptions and city-level data, here.

10 Comments so far. Feel free to join this conversation.

  1. Jack Howerton January 23, 2016 at 7:49 am - Reply

    these numbers in remodeling costs are way way off >>>>

  2. Frank Vigliotti January 23, 2016 at 8:05 am - Reply

    Although I appreciate these numbers, I have to disagree with some of the updates ROI here in South Florida. We are a unique real estate market and that is what probably skew these numbers away from what is suitable updates here. And the cost to get work done is sharply different here in the Miami-Fort Lauderdale area.

    The windows category, for example, I sell many homes in our region and impact windows and doors can earn a seller at the least their investment back at the sale. I would urge the readers of your article that these figures are regional and what works in one real estate market may not necessarily apply to another.
    Nonetheless, thank you for crunching the numbers and provide us some sort of guideline for this topic.

  3. Caryl Iseman January 23, 2016 at 10:48 am - Reply

    I really would like to see a report done on just condominiums. Remodels are different can have different results. With so much of the population owning condos you would think you would think more emphasis would be given to them

  4. Jim Somers January 23, 2016 at 1:34 pm - Reply

    All real estate is local. Here in the San Francisco Bay Area, the biggest bangs for the remodeling buck are, major kitchen remodel and major bathroom remodel. These will consistently return $1.25-$1.50 for every dollar invested. Master suite additions and family room addition also provide more than 100% returns. This may not be the case nationally but it sure is the case in this market.

  5. Terri Koepper January 27, 2016 at 8:54 am - Reply

    Interesting, this report is basically saying that any improvements to your home are not financially a good investment. If I were to show this to a seller, they would wonder why they should ever fix up their home to sell!

  6. leeshin February 4, 2016 at 12:16 am - Reply

    very useful blog, thank you for sharing

  7. Elizabeth Przybyla February 4, 2016 at 8:58 pm - Reply

    I agree with Terri Koepper and I don’t believe that these numbers are correct.
    Bathroom additions are always a very good investment and having one bath versus two is absolutely going to pay a good dividend and that applies to any market. Similarly with master suite and kitchen remodel.

  8. Teri Pacitto February 8, 2016 at 9:54 am - Reply

    in most situations remodeling or updating a home prior to going on the market for sale is a good idea however costs can vary as do returns. Return on the investment is way too broad to post costs vs returns and unless one is comparing a specific location and type of dwelling these generalities should not be relied upon.

  9. Jammy Hope March 14, 2016 at 12:09 am - Reply

    A interesting and useful post. You have mentioned some very valuable points. Thanks a lot for sharing this Suzanne.

  10. Joanna Reaves May 26, 2016 at 1:53 am - Reply

    Thank you for sharing.

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