Home Improvement Return on Investment: Which Fixes Really Pay Off?
Home improvement return on investment should be top of mind even if you don't plan to put your home on the market. Updating your home to add special features, make spaces more functional or add that backyard entertainment area can make you happy and probably cross something off your list you’ve been waiting on for quite a while. But whether you want to simply enhance your home or if moving trucks are indeed in your future, it's a good idea to consider how much money you can recoup from home improvement projects.
Top Payback Performers
One useful resource to determine the best renovation value is the 2020 Cost vs. Value Report conducted by Remodeling Magazine, which shares the average costs of 22 remodeling projects and how much real estate professionals expect those jobs would increase a home's value if sold within a year of the work. The report can be broken down for 101 U.S. markets, but its national averages are useful as well.
Curb appeal projects add to the overall value of your home, so it’s no surprise that manufactured stone veneer tops the list in 2020. Because of the rising cost of materials needed for remodeling, carefully consider what will add the most value to your home, especially if you plan to sell your house soon. A minor kitchen remodel is a great option if you must do some type of remodel for your house now.
Consider these national averages from Remodeling:
- Manufactured stone veneer, an alternative for siding and stone projects ($9,357): 95.6 percent of costs recouped
- Garage door replacement ($3,695): 94.5 percent of costs recouped
- Minor kitchen remodel ($23,452): 77.6 percent of costs recouped
The Variables
It's important to remember that many factors can affect how much value your projects retain. Your choice of materials comes into play, as does the amount of time that passes before you list your home - color trends and in-demand features change over time.
Metal roofing is a new trend that’s likely to stay around for a while. While metal roofing costs two or three times more than asphalt shingles, it’s also more durable and lasts much longer. Metal roofs will yield a 61.2 percent return on investment and experts predict they will continue to increase in value. Investing in a metal roof makes sense if you plan to stay in your home long enough to enjoy the cost benefits.
Seek Local Opinions
Since real estate agents spend so much time in the field, they can offer great insight about potential projects, even if you're not ready to list your home. You may be tempted to knock down a wall to create a more open floor plan, for example, and agents may tell you their clients are leaning away from that design. Agents can also offer tips on small changes that can have a meaningful impact, like which rooms should be repainted or which cabinet pulls should be replaced.
Lastly, keep in mind that there are several options available to help you finance an improvement project that can benefit both you and your home’s next residents. Taking out a home improvement loan is a great option that does not require any collateral. But, if you have equity in your home, you may want to consider a home equity loan or home equity line of credit. There are many different routes you can take, so be sure to talk to an experienced banker to see what option is best for you.