Home improvements can be quite costly. Some can be worth the investment, depending on the type of renovation and the timing in regards to when or if you sell your home; but others not so much.
The key is to determine your immediate and long-term goals before making the decision. Are you planning to sell in one, five, or fifteen years? These factors will affect the return on investment of the improvement and should be carefully considered. Are you improving to get a higher selling price or for your personal livability?
The challenge is to take stock of your individual situation and decide which improvements make sense. Should you replace your front door, remodel your kitchen, add a room, or update your home office? Maybe all – or none – of the above.
A loanDepot licensed loan consultant can help with these and any other lending questions. Call (888) 983-3240 to speak with one today.
In the meantime, here are several good ways to figure out the answer:
You could ask your neighbors about their experiences. You could ask local Realtors or real estate agents which features are drawing the most enthusiasm and interest with homes currently for sale in the area. You could ask home improvement contractors which upgrades would add the most value in your area and type of home.
The more data you collect, the smarter choices you'll make.
Check national surveys
Another resource is to check the annual ‘Cost v. Value Report’ sponsored by Remodeling magazine. This report compares average costs for 36 popular remodeling projects to how much value those projects retain when a home is sold. The projects are divided into two groups: midrange and upscale at the Cost vs. Value Report.
Nationally, one midrange project recovered its full value in the report. That project was a new steel front door, which earned back 102 percent of its cost, on average. The runners-up were manufactured stone veneer, which recovered 92 percent, and a new garage door, which recovered 88 percent.
Five other midrange projects also recovered most of their cost. They were replacement vinyl siding (81%), wood deck addition (80%), minor kitchen remodel (79%), wood replacement windows (79%) and an attic bedroom (77%).
The worst returns were for a home office remodel (47%) and a sunroom addition (48%).
Upscale projects generally cost much more and offered a significantly lower return than midrange projects, nationally speaking.
It’s important to remember that the costs and values in the remodeling report are averages based on survey data. Every home remodeling project is unique, and what adds value to one home might not add value to another.
What's more, cost-versus-value comparisons vary from one region of the U.S. to another. In some regions, most of the midrange projects returned less than the national average.
In the Pacific region, which includes Alaska, California, Hawaii, Oregon and Washington, all of the midrange projects returned more than the national average, and five recouped more than 100 percent of their cost.
The investment with the highest ROI in this region was again the steel entry door replacement, which returned 123 percent. Other net-gainers were a garage door replacement (110%), manufactured stone veneer (107%), minor kitchen remodel (102%) and wood deck addition (101%).
Remodeling costs and values vary from year to year with some projects gaining value and others losing. A project's return today might differ dramatically from its return next year or in five, 10 or 20 years from now.
Stay or move?
The bottom line for homeowners is that remodeling is also about personal preferences. If you intend to sell your home soon, renovations might not be worth the investment. If you plan to stay for a long time, remodeling could make your home more comfortable, functional and aesthetically pleasing for you and your family and guests.
The decision is yours.
For more information, speak with a loanDepot licensed loan officer at (888) 983-3240.
Published on June 29, 2018
BACK TO KNOWLEDGE CAFE
5 reasons to renovate
2015 second-half snapshot – what's happening in housing?
How to save money without sacrificing your lifestyle
Mark Greene: when is the best time to buy a home?