Harvard’s Joint Center for Housing Studies estimates that Americans’ total spend on home remodeling projects will rise from $332 billion in Q3 2020 to $337 billion in the second half of 2021.
Does that mean homeowners have found the key to economic prosperity — expensive renovations that pay dividends at resale?
Unfortunately not…In fact, the average amount recouped for home remodeling projects is on the decline. According to a survey of real estate professionals by Remodeling magazine, this year’s average return on 21 popular remodeling projects came in at 66.5% nationally, down from 68.6% in 2019.
Nevertheless, as the coronavirus pandemic drags on, 76% of real estate agents say that home renovation activity is on the rise. Many homeowners who would rather not brave a real estate world with rock-bottom inventory are choosing instead to reconfigure their current residences.
The key then is knowing what upgrades increase home value when the time to sell inevitably comes, as your ROI “really depends on the type of house you’re selling and whom you’re selling to,” said Alexandra Isham, program manager, design, with the National Association of Home Builders (NAHB) in Washington, D.C.
Using research from the National Association of Realtors (NAR), the NAHB, and out-in-the-field resources like top Atlanta real estate agent Leighann Russell, we put together this list of 19 home remodeling project recommendations so you can make better decisions about where to invest your money.
Upgrades that add physical square footage or make the home feel more spacious
Home buyers appreciate ample space. Regardless of income bracket, people who bought a home within the past three years or planned to buy a home in the next three years wanted more square footage, according to NAHB’s 2017 Home Buyer Preferences study shared with HomeLight. That desire among buyers has only gained momentum in the wake of the coronavirus pandemic. In 2020, 44% of real estate agents cited the “need for more space” as the no. 1 moving motivator.
1. Finish your basement
High-income buyers (those earning $150,000 and more) in the Northeast, Middle Atlantic states, and Pacific Northwest in particular like basements, NAHB’s study shows.
“You’re adding more heated square footage,” explains Russell, which bumps up your house into another price bracket.
Even among homes ranging from $250,000 to $400,000 in Georgia, an unfinished basement can add about $15,000 to $20,000, Russell says. If finished, a basement can add even more — up to $40,000 or $50,000 to the asking price.
Finishing a basement will run you $18,400 on average, but can cost up to $34,000, largely depending on your square footage. The project involves installing drywall, flooring, and paint but can recoup up to 70% of the cost, according to HomeAdvisor.
2. Open up the floor plan
Knocking out the right wall creates that spacious layout on buyers’ wish lists. NAHB’s survey shows that buyers favor designs that are either completely open or partially open around the living room, dining room, and kitchen.
An open arrangement allows for more natural light, which is always inviting, says Isham. “It feels like you have more space to play with.”
That said, a home still needs structural support and definition between spaces, so consult with a contractor or interior designer before picking up a sledgehammer. “If there’s no definition, it’s kind of paralyzing for a buyer: ‘How do I picture what I have in this space?’” Isham adds.
Upgrades that enhance your home’s curb appeal and exterior
Curb appeal is all about making a splash with buyers before they even enter your home.
For starters, attractive landscaping implies that the home is well-maintained. In fact, in a 2018 survey, 17% of Realtors said that a landscape maintenance project recently resulted in a sale. To mow the lawn, prune shrubs, apply mulch, and plant about 60 perennials or annuals over about 2,800 square feet costs about $3,000 — but has a 100% return on investment, NAR says.
And 2019 HomeLight data backs up that focusing on buyer first impressions is crucial: 76% of agents agreed that curb appeal is the no. 1 project you should complete to improve your home’s marketability, and over 94% believe curb appeal will even boost your home’s value.
Other ways to make the outside stand out include:
3. Add stone veneer to the front of your house
In a midrange home, replacing a 300-square-foot band of existing vinyl siding from the bottom third of the street-facing facade with adhered manufactured stone veneer costs an average of $9,537 but recovers about 96% of that at resale, according to Remodeling magazine’s 2020 Cost vs. Value Report.
4. Get a door of steel
Replacing an existing entry door with a steel one has proven to recover anywhere from 69% to 91% at resale over the past three years, statistics show. Buyers will appreciate the energy efficiency, low maintenance, and cold-blocking powers of metal.
Try the highly rated JELD-WAN Lite Craftsman Front Door with Brickmould ($283) or the slightly more upscale Chatam by Stanley Doors ($436).
5. Replace your garage door
A new garage door practically pays for itself if you reuse the existing motorized opener, recouping about 95% of your costs at resale, statistics show.
You can’t go wrong with a simple upgrade from the best-selling Clopay Classic Collection ($238).
6. Touch up your exterior paint
If you’re on a budget, you don’t have to repaint your whole house to make it look new again.
Touch up any flaking or chips, or pressure wash the exterior to remove dirt and mold. You also can just paint the front door and trim.
A front door in a bold color like buttery yellow, powder blue, or forest green makes the entrance pop against a neutral exterior, says ProTect Painters, a painting franchise since 1995.
Upgrades that add style for less in key rooms
Buyers will look at your kitchens and baths and either be relieved that they don’t have to gut them or start counting up the dollar signs.
But the key with bath and kitchen remodels is to keep costs down and avoid total overhauls that don’t have great ROI. Think functional and updated, rather than breathtaking and luxury.
7. Swap out your fixtures in the kitchen and bathrooms
New drawer knobs, pulls, and faucets in a matching style give a room a cohesive, modern look, and this small, inexpensive upgrade alone can have a big impact on buyers.
Trends vary nationwide, so ask your real estate agent what buyers look for in your area.
8. Do a minor remodel rather than an upscale one
You can do a minor kitchen remodel of a 200-square-foot kitchen for about $21,000, and recover about 77.6% of your spend at resale. Compare that to a major, upscale kitchen remodel, which will only recoup 58.6% of your costs.
The key money saver in a minor remodel is that you replace cabinet fronts with an updated style, such as the trendy and functional shaker cabinet fronts, and leave the cabinet boxes in place.
Likewise, a midrange remodel of a bathroom for $21,377 recoups about 64% of its cost at resale, compared to an upscale bathroom overhaul (56%).
Skip the heated floors, heated towel racks, body-spray fixtures, and frameless glass enclosures.
Ceramic tile floors and new, standard fixtures will do the trick!
9. Install hardwood floors or refinish your existing ones
According to NAR’s 2019 Remodeling Impact Report, refinishing hardwood floors recovers 100% of the cost at resale, while new wood flooring recoups 106% of costs.
That said, the cost recouped on updated flooring depends on its current condition and your house’s price range.
“Generally, if I get to a higher-end home and the carpets are decent, I don’t advise them to replace (the carpets) because I know that someone’s going to come in and replace it with hardwood,” Russell says. Some buyers and sellers will negotiate a flooring allowance if the seller doesn’t want to take on that cost.
However, if you have pets or your carpet has seen better days, a few thousand dollars to replace it is money well spent, Russell says.
10. Paint in a neutral palette
Light, neutral wall colors make for a good palette for resale because buyers can easily imagine their belongings in the space, Isham said.
Russell agreed. “It’s just a subtle neutral that can kind of flow with everything without (the seller) having to change the entire house,” she added.
Pottery Barn and Sherwin Williams, an interior design inspiration power duo if there ever was one, offer more insights on playing with light neutrals in their video “Our 10 Best Interior Colors.”
Interior designers Leanne McKeachie and Lana Lounsbury note that light colors add freshness and style. They suggest Benjamin Moore’s Wickham Gray (HC-171), which has a hint of blue; Benjamin Moore’s Gray Owl (OC-52), which has slight blue and brown undertones; or Benjamin Moore’s Cake Batter (CSP-215), a beige that gives the interior “a feeling of sunshine.”
If you already have neutral wall colors, you can paint the trim, molding, and windows with a washable and durable satin or gloss finish for a low-cost renovation that produces a dramatic change.
One combination that designers in the Colorado area like for an upscale look is white walls with black trim, Isham says.
Upgrades that reduce maintenance hassles
If your house is 10-15 years old, any big-ticket items that buyers might have to repair or replace in the next few years could be off-putting. Making those repairs now helps you get your best asking price:
11. Redo the roof
Replacing a roof recovers 107% of its cost at resale, according to NAR. “A house sitting there at $250,000 with a brand-new roof is going to bring more value than the house sitting next door that’s the same floor plan with a 15-year-old roof,” Russell adds.
12. Pump up the HVAC
Buyers often ask when the HVAC was installed or replaced, as well as if the home has a tankless hot water heater, Russell says.
No wonder NAR notes that an HVAC replacement recoups about 85% of its cost upon resale.
13. Siding that’s on your side
Is your home’s siding in good shape? Regardless, some buyers will ask about siding brands that have been in the news because of problems such as durability or mold.
So know what brand you have and when it was installed, Russell says. If you need to replace it, new fiber-cement or vinyl siding recoups about 63%-76% of its costs at resale.
Upgrades that make your home more efficient
The majority of buyers think of green features to save on their utility bills. As of 2019, the NAHB notes that buyers would pay an additional $8,728 upfront to save $1,000 a year in utility costs. These upgrades can help:
14. Replace your old toilets with low-flow fixtures
Toilet technology has improved since 1994, when federal law restricted toilet tanks to 1.6 gallons per flush (GPF).
Low-flow toilets now move less water more forcefully into the bowl with each flush. Try the Glacier Bay 1.28 GPF High Efficiency Single Flush round toilet for about $89 or Kohler’s Cimarron 360 Complete Comfort Height 1.28 GPF Single Flush elongated toilet for about $199.
15. Put in energy-efficient appliances
Appliances with the Energy Star symbol, the federal certification that they reduce energy use without sacrificing performance, ranked either as desirable or essential home features among nearly 90% of moderate-income home buyers in the NAHB study.
16. Get energy-efficient windows
Home buyers of every economic background, from those with incomes under $75,000 to those with incomes over $150,000, ranked Energy Star-rated windows among their most-wanted features, whether with triple-pane insulating glass or with low-e insulating glass, the NAHB survey says.
What’s more, replacing double-hung windows with insulated vinyl windows recovers about 74% of the costs, notes Remodeling magazine.
However, the government’s minimum energy-efficiency standards for new windows varies nationwide based on your climate zone.
The U.S. Department of Energy has an online guide to these standards. The guide is broken out by region and deciphers the labels on these windows so you can shop for those that meet your area’s minimums for stopping heat flow, blocking the sun’s heat, and allowing a certain amount of light to enter.
Upgrades that cater to your area’s trends and demographics
Certain features appeal to different demographics, depending on your neighborhood as well as your price point.
Millennials, for instance, represent 38% of all homebuyers, the largest group of buyers in 2020. Some of their top wants involve smart home technology, such as high-end Wi-Fi access and keyless entry.
Buyers on the older end of the spectrum, on the other hand, are thinking about convenience, accessibility, and aging in place.
Depending on the types of buyers dominating your market, consider the following upgrades:
17. Make your laundry room more accessible
A lot of home buyers prefer not using the stairs to do laundry. The NAHB survey shows 68% of moderate-income buyers and 69% of high-income buyers prefer having the clothes washer and dryer on the main floor instead of in the basement or the garage.
Some homes above $200,000 have a larger laundry room with a drop zone for children’s backpacks and shoes, or connect the laundry room to the master bedroom instead of the kitchen, Russell says.
“You’re able to access your laundry room from your master bedroom, but you also can access it from your hallway,” she says, “which is a huge trend we’re seeing right now. … especially with people buying ranches because they’re downsizing.”
18. Turn your shower into a walk-in
Although 77% of home buyers with moderate income (under $75,000) in the NAHB survey ranked having both a shower stall and tub in the master bathroom as essential and desirable, Russell says that in her area, some older buyers as well as younger ones are fine with just a shower in the master bath.
(To qualify as a “full bath” to an appraiser, a bathroom must have a full-size tub, but it doesn’t have to be the master bathroom. A tub in a secondary bathroom is fine, especially for bathing children.)
“A lot of builders in our area are not even putting a tub in the master bathroom … and if they do a tub, it’s a freestanding tub. Nobody wants a whirlpool tub anymore. They’re dirty; they’re gross,” Russell says.
A prefab walk-in shower kit costs between $800 and $2,500, based on quality and size; professional installation is extra. Consider DreamLine’s Prime Semi-Frameless Sliding Shower Enclosure or Ella’s Classic Low Threshold Shower Stall with grab bars and molded seat.
19. Install a smart thermostat
Just like energy-efficient appliances, programmable thermostats and other energy-management systems have widespread appeal, ranking among the three most-wanted home technologies in the NAHB survey.
A smart thermostat can adjust your house’s energy consumption depending on the latest gas or electricity prices, or even allow you to phone in instructions such as turning on the furnace before you get home. Prices range from $150 to $400 or more, plus installation from a trained electrician or HVAC contractor. Try the Emerson or Aprilaire 8600.
Be strategic as you look around your home, deciding what you want to revamp so buyers see your place as someplace they want to live.
“Some buyers just don’t have the vision to see what it could be,” Russell says, but even little things can help buyers say, “You know what? We don’t have to do anything to this house. It’s perfect. Let’s go in at a strong price.”
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