Have you thought about improving where you live?
If you own your home, one topic that will come up sooner or later is home improvements. To upgrade the kitchen appliances, a fresh coat of paint in the bedroom, or new living room windows.
I’m sure if you take a quick look around your home, there’s a few areas that you would like to spruce up. But the cost of those home renovation projects quickly adds up. And the argument that “all improvements will increase our home value” really doesn’t stand up.
With cost in mind, which of those projects will deliver on the value promise? And which of those projects are on the “nice to have” list.
How Do Home Renovation Projects Measure Up?
If you’ve a hankering after binge watching too much Holmes on Homes, or Property Brothers to start swinging a hammer in your home, there are a few area’s that our friends over at HGTV would start with. Fortunately, when you’re focused simply on resale value, smaller projects often have a better payoff.
Minor updates to a dated bathroom and kitchen might actually see your bank account topped back up after selling, with almost 100% of the renovation costs translating into home value. Unfortunately, these projects do have diminishing returns. The more extensive the project and those costs don’t add as much value.
Fixing up the basement or adding a room in the attic will also see a return of around 90%, meaning the cost of the renovation will slightly outpace the increase in property value.
Directing our attention outside, certain renovation projects again come out ahead. Fixing up the landscaping, fresh grass, etc. will directly improve the property’s value. Looking at hardscaping though, such as a new patio or deck, will likely not increase the property value by the cost of the project.
When the Numbers Change
Looking into the cost/benefit of certain renovation projects is an important consideration. But sometimes it’s not quite so clear cut.
Think of the last time you were looking at properties. Scrolling through the listings, you judge the property and its perceived value by the images you see. And the listings that don’t have the right mix of photos? They’re simply disregarded.
What this really means to you is that your property needs to have a certain set of attributes to even be considered. While that kitchen reno might not be adding its full cost in appraised value, by not having that renovation done, your homes’ value might be suffering. That lack of attention invariably drives your home value lower.
Ultimately, your neighborhood will help dictate the returns on those projects. Having the nicest kitchen in the area does add value, but you’ll still be constrained by the economic standing of that neighborhood.
It’s Not All About the Money
It’s easy to take our inspiration from those television shows, and get caught up in the economic impacts that these shows are based on. But it’s equally important to think about those renovations from the perspective of a user. This is your home, where you spend most of your life. If making some changes will improve the quality and enjoyment of your life, then it shouldn’t matter as much about what those renovations mean to your property value.
When considering what projects to undertake, if you aren’t immediately doing this to sell, then you should be considering what will bring you the most joy. Would you love to host backyard parties? Then maybe that new patio is worth the expense, for the extra joy your home will bring you.
Home renovations are a great way to increase your home’s value, but sometimes it isn’t all about the money. This is your home, and the joy and satisfaction you’ll experience from sitting in that prettied up room certainly need to be valued.