The Value of Home Improvements
While home improvement projects add value to your home, if you undertake large renovations, it could be a challenge to recoup your costs when it’s time to sell. The National Center for Real Estate Research released a detailed analysis of property characteristics and selling prices. The report cautions that “homeowners must be keenly aware of the trade-offs when making remodelling decisions, especially if these renovations are done in anticipation of selling the home.”
What impact do various renovations have on your home’s value? The study has some interesting findings:
- Exterior features that affect selling price most are a patio and sprinkler system.
- Houses with vinyl and aluminium exteriors sell for about 4 percent less than houses with brick, while houses with stucco and wood exteriors sell for about 9 percent more.
- Internal features that add the most value are a family room, dining room, whirlpool, and security system.
- A laundry in the basement decreases value by 2 percent.
- Fireplaces have a strong, positive effect on selling price with each fireplace adding about 12 percent.
- Floors that are wood, tile, or a combination of those add the most value.
- Kitchen features that are most valued are a built-in refrigerator, kitchen island, and double oven.
- In climates with hot, humid summers, central air conditioning adds about 12 percent to price.
- A sitting area in the master bedroom increases price by 8 percent.
Cost vs Value 2017
We are frequently asked what home improvements have the best return on investment. Every year Remodelling magazine in cooperation with the National Association of Realtors and Realtor Magazine provide an annual report comparing the actual cost of a project and the homeowners return on investment when it comes time to sell.
Here are the highlights of the annual 2017 Cost vs Value Report. If you’re thinking of remodeling or adding onto your house the following returns on your costs should help you with your decision making.
In a real estate transaction, the “cost recouped” for a remodeling project depends on a variety of factors. These include the home’s layout, the quality of finishes, the condition of the rest of the property, the value of similar homes nearby, supply and demand in the neighbourhood and the property’s specific location.
The following demonstrate the percentage cost that a homeowner recouped for the improvement of their Remodels & Additions.
With the many different projects reported annually in Remodeling Magazine’s Cost vs. Value Report, not much has changed from last year…and that’s not a bad thing. The 29 projects found on this year’s report paid back an average of 64.3 cents on the dollar in resale value. Looking at the 24 most tracked projects (projects consistently tracked for the last six years), their payback for 2017 was also 64.3 cents—only three-quarters of a penny higher than 2016 projections.
Why the little change? Simply put: the differences in underlying numbers was minimal year-to-year. The average cost for those 24 projects rose a meager 3 percent, while the value that real estate professionals put on said projects only rose 4.2 percent. Minor gains, yes, but we’ll take what we can get.
Recent and long-time trends continued, reports Remodeling. Curb appeal projects like changes to doors, windows and siding garnered a higher ROI than work done inside the home. Replacement projects, like doors or windows, scored higher among real estate pros than did remodels.
On a national scale, the top five projects with the greatest ROI in the report’s “midrange” cost category are:
Attic Insulation (Fiberglass) (107.7% ROI)
Average Cost: $1,343
Average Resale Value: $1,446
Entry Door Replacement (steel) (90.7% ROI)
Average Cost: $1,413
Average Resale Value: $1,282
Manufactured Stone Veneer (89.4% ROI)
Average Cost: $7,851
Average Resale Value: $7,019
Minor Kitchen Remodel (80.2% ROI)
Average Cost: $20,830
Average Resale Value: $16,699
Garage Door Replacement (76.9% ROI)
Average Cost: $1,749
Average Resale Value: $1,345
The top five projects with the greatest ROI in the report’s “upscale” cost category are:
Garage Door Replacement (85.0% ROI)
Average Cost: $3,304
Average Resale Value: $2,810
Entry Door Replacement (fiberglass) (77.8% ROI)
Average Cost: $3,276
Average Resale Value: $2,550
Window Replacement (vinyl) (73.9% ROI)
Average Cost: $15,282
Average Resale Value: $11,286
Window Replacement (wood) (73.0% ROI)
Average Cost: $18,759
Average Resale Value: $13,691
Grand Entrance (fiberglass) (70.1% ROI)
Average Cost: $8,358
Average Resale Value: $5,855
At the other end of the spectrum are projects with the lowest returns on investment—improvements generally not in demand by the market. Again on a national scale.
The five projects with the lowest ROI in the “midrange” cost category are:
Bathroom Remodel (64.8% ROI)
Average Cost: $18,546
Average Resale Value: $12,024
Master Suite Addition (64.8% ROI)
Average Cost: $119,533
Average Resale Value: $77,506
Backyard Patio (54.9% ROI)
Average Cost: $51,985
Average Resale Value: $28,546
Backup Power Generator (54.0% ROI)
Average Cost: $12,860
Average Resale Value: $6,940
Bathroom Addition (53.9% ROI)
Average Cost: $43,232
Average Resale Value: $23,283
The five projects with the lowest ROI in the “upscale” cost category are:
Major Kitchen Remodel (61.9% ROI)
Average Cost: $122,991
Average Resale Value: $76,149
Master Suite Addition (59.9% ROI)
Average Cost: $250,687
Average Resale Value: $150,140
Bathroom Remodel (59.1% ROI)
Average Cost: $59,979
Average Resale Value: $35,456
Bathroom Addition (57.1% ROI)
Average Cost: $81,515
Average Resale Value: $46,507
Deck Addition (composite) (56.4% ROI)
Average Cost: $39,339
Average Resale Value: $22,171
The 2017 Cost vs. Value Report compares, across 99 markets, the average cost of 29 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.
Simpler strategies to put your home in its best light are basic clean-up, adding a fresh coat of paint, replacing carpeting, tidying landscaping and updating fixtures, windows, and doors. Consider completing deferred maintenance, such as fixing driveway cracks and damaged fencing.
Make sure that renovations are consistent – if the front yard has been recently landscaped but the back yard is still a mess, visitors (and potential home buyers) will tend to notice what’s left to be done. Bear in mind that any improvements you make which are not in line with what’s been done to other homes in the neighbourhood probably won’t pay off. If you should decide to put your home on the market, concentrate on maximizing curb appeal, and leave any over-ambitious, large-scale improvements to the new buyer.
For more information contact The Wilson Team or call 613-695-9250
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