Remodeling your home can be a pricey endeavor to undertake. According to a CNBC article, this year American consumers will spend nearly $340 billion on remodeling. This figure indicates an increase of 7.5 percent from the total for 2017, the Joint Center for Housing Studies (JCHS) at Harvard reports. If you plan on remodeling your home in 2018, you naturally want to get the most from your return on investment (ROI).
Go Big or Go Home?
The economy continues to recover from last decade’s recession that was so devastating to the real estate market. This indicates that the market is ripe for remodeling, especially the coastal regions that were hit hard by a series of natural disasters last year. What surprises many homeowners is that higher-end projects with expensive upgrades aren’t yielding the desired resale value. The changes to the nation’s tax laws, e.g., the ability to deduct mortgage interest from tax returns, may be a factor in this trend.
The average ROI of a remodeled home’s resale value is 56 percent of total remodeling costs. However, more mundane refurbishments like new windows or garage doors tend to yield paybacks as high as 75 percent. As always, location matters, as West Coasters routinely see paybacks of 64 percent, while homeowners living in the Mid-Atlantic states may only see a little over 50 percent ROI. Those living in hurricane-prone areas or locations where power outages frequently occur might want to consider installing a back-up power generator system for their homes. The average ROI for that upgrade is 54 percent.
Curb Appeal Tops Inside Jobs
When considering what type of renovations to do, outdoor living and “curb appeal” projects bring higher ROI than interior projects. Add on a wooden deck to your home and you could see almost an 18 percent uptick. Conversely, popular remodeling projects like additions to the master suite are down nearly 15 percent. Even upgrading the kitchen shows a value loss of nearly 11 percent.
If you just can’t cook another meal in that kitchen without making some changes, think small. Due to the extreme variations in people’s decorating tastes, a major overhaul may yield only a 59 percent ROI, whereas upgrading appliances — a minor remodel — could net you over 80 percent ROI.
You Can Still Have Your Dream Bathroom
According to a report by Priority Management Pittsburgh for a magazine article, Americans spend nearly seven years of their lives in the bathroom. You might as well enjoy your surroundings. While spa tubs used to be the hot item, large, walk-in showers are all the rage today. Space is limited? Go with the shower option for a more modern look. But if you live in a home with only a single bathroom, you’ll get a better ROI installing a second one than by adding pricey features to the one you already have.
Fix Flaws First
No matter how flawless the marble is in the newly renovated master bath, if the house has a shifting foundation or leaky roof, it won’t be easy to get a nibble on the real estate market. It’s not sexy making structural repairs or redoing drainage systems, but that’s where you must start.
Don’t know where to start? Work from the top down. Data from last year indicates that, on average, replacing the fiberglass insulation in the attic yields a 107.7 percent ROI, or a $1,446 resale value for a repair that cost just $1,343.