Which Renovation Projects Provide the Smallest Return?

The National Association of REALTORS® and the National Association of the Remodeling Industry has recently released a report to give insight as to which of the most popular home renovation projects would provide the most impact to your bottom line when it comes time to sell your home. It becomes clear that some renovations offer more bang for your buck, while others leave the homeowner with a pretty small return on investment.

What hit the top of the list as being able to recoup the most value at resale? According to the research, homeowners installing a new roof got 105% of the costs back when they sold, and those that refinished hardwood floors found the project was worth every penny of the cost when they got 100% of their investment back at closing. Also impressive was a project that involved a complete insulation upgrade to a house, which saw a 95% return on the costs when the house sold, and installing new hardwood floors recouped renovations costs with a 91% return. Rounding out the list, a new garage door got homeowners 87% percent of their investment back when they sold.

On the joy scale, because money is not all that matters, homeowners found the most happiness with a renovation project when it improved their living conditions, for example, by adding a bathroom, renovating an outdated kitchen, and creating a large master bedroom suite.

There were however, 20 projects that fell short on value recovery and offered the smallest percentage back when the home owners sold their home. Does this mean you should not tackle these home improvement projects? Not at all, it simply means that you should do it for your family’s enjoyment or comfort (your joy factor), but not expect to recoup the full amount you spent in the selling price of your home. Essentially, they add value, but not the full amount you will spend on them.

Bathroom addition

• Average cost: $50,000
• Recouped at resale: 52%

Master suite addition

• Average cost: $112,500
• Recouped at resale: 53%

Closet renovation

• Average cost: $3,500
• Recouped at resale: 57%

Bathroom renovation

• Average cost: $26,000
• Recouped at resale: 58%

New wood-frame windows

• Average cost: $26,000
• Recouped at resale: 58%

So, what did buyers say they want to see the most in the homes that they viewed? Topping the list was a nice kitchen upgrade or a complete kitchen renovation. Next in popularity was a bathroom renovation or new wood flooring throughout the house. So, even if you don’t recoup your full investment value when you sell, you should know that these improvement will help attract potential buyers to make offer, more so than homes that have not completed such renovation projects.

When you consider renovation projects for your home, think about how soon you will sell. If you are not moving in the next few years, it is wise to take on the ones you will enjoy the most while you are living in your home. Consider the value you will add, but look at the ones that will also bring you homeowners’ joy.