Home prices and mortgage rates continue to increase, making homeowners unable to buy a new property. Instead, they are investing their money in renovation projects that can increase their home market value. [Related topic: Milan garage doors)
But how much can a renovation project add to your home’s market value? Well, of course, the answer will vary depending on which renovation projects or remodeling endeavors you take but remodeling spending is expected to hit $340 billion this year, which represents 7.5% more than it was last year.
Now, what this means is that you have to be smart about your renovations, and note that high-end projects might not be the one to add the most value to your house remodeling project. Expensive upgrades and additions don’t seem to increase the resale value in a significant way.
In the current climate, your home’s resale value is set to increase by 56% of the cost of the remodeling you made, on average. Nevertheless, the biggest increase doesn’t come from adding a pool or redoing your bathroom but from replacing garage doors and windows. In fact, the payback increases over 75%.
There’s also a location factor to the value of your home renovations. Since real estate is local, the way in which the market works varies from one place to the other, even if there’s a widely spread tendency towards the same thing. Either way, you’ll see the highest remodeling returns in properties on the West Coast, where in average the payback is 64% of the cost of the renovations, while In the Mid-Atlantic region, the average is only 51%.
The renovations that are paying the most are the external ones; anything that increases curb appeal is guaranteed to add the greatest market value as well as outdoor living. For example, garage door replacement adds up 18.6%, wood deck additions add 17.7%, and manufactured stone veneer installations can add up 15.7%, while on the other side of the spectrum, you have master suite additions which their average payback value has decreased to 14.7%, and major kitchen remodeling to 10.9%.
Minor kitchen remodels can pay you an 81% return, unlike major high-end kitchen remodels that will just give you 59%. The same situation happens with bathrooms; modern and highly functional appliances or new fixtures beat fancy bathtubs and luxurious tiles.