Not all remodeling projects are created equal. Kitchens, bathrooms, family rooms, or master suite add-ons will have the highest return on investment. Founded in 1976, Bankrate has a long history of helping people make smart financial decisions. We have maintained this reputation for more than four decades, demystifying the financial decision-making process and giving people the confidence to decide what steps to take.
take next. Each year, the respected trade publication Remodeling analyzes the costs of major home renovations and estimates the resale value of those projects. Released in April, the “2024 Cost and Value” report compares the average cost of 23 remodeling projects in 150 U.S. markets.
In the US, and three offer a return on investment (ROI) of 100 percent or more. This means that they will amortize when it comes time to sell or refinance your home, because the value of the home and the sale price will increase when you put it on the market. Installing a large fiberglass entrance means making the current entrance a little wider and installing a fiberglass door that has matching decorative side lights. This is a relatively simple job for a contractor, can be completed in one day and significantly improves the curb appeal of your home.
Even better, starting in 2024, it offers a return on investment of nearly 100 percent, meaning you'll get back almost everything you spend at the time of resale. Stone always imparts a classic and elegant atmosphere to a residence. Replacing vinyl siding with stone veneer, even in just one part of your house, such as the entrance, can greatly improve the exterior and, again, the curb appeal of a home. The average cost estimate takes into account 36 linear feet of sills, 40 linear feet of corners and a steering block, and materials that include two layers of water resistant barrier and corrosion resistant slats and fasteners.
This project not only adds class to your home, but also money to your pocket, since it also recovers all your expenses and then some. Of course, a modern and functional kitchen can increase the enjoyment of everyday activities, such as cooking, sharing meals and entertaining to friends. It's also a solid sales pitch for potential homebuyers. A minor remodel with mid-range materials, as defined in the report, is based on a 200-square-foot kitchen with 30 linear feet of countertops and cabinets.
It includes replacing appliances with new, more energy efficient models; renovating cabinet cladding with shaker panels; installing new countertops or a sink; replacing hardware; adding new floors; and repainting walls. Paying for home improvements while saving is always an option and, in fact, most renovators do, according to the U.S. 2024. Houzz and Home Study, a survey of 33,830 homeowners in the U.S. UU.
You can also use credit cards to cover home renovations, although interest rates can be high and you'll want to avoid piling up debt month after month. A minor bathroom remodel has an average ROI of 102%, meaning you should get all your money back and a little more when it comes time to sell the house. Small improvements as simple as replacing a showerhead, bathtub, or vanity go a long way to the ROI of the renovation. A major renovation that includes the destruction of the entire bathroom has an ROI of around 93%, so it's best to spend your money on small repairs if you're only concerned about the resale value.
Spending more on creating the bathroom of your dreams makes sense if you plan to stay in the house to enjoy it for a while, but not so much if the goal is to sell it. The attic space can also be transformed into an additional bedroom or office for similar results to a finished basement. Smaller improvements, such as replacing the front door and windows, renovating the finish of wood floors, changing doorknobs and other hardware for something more modern, and adding a new coat of paint to walls can do wonders. A study by the National Association of Realtors1 confirms that kitchens and bathrooms continue to top the list of interior home improvement projects that attract potential buyers the most.
The survey ranked projects based on the percentage of the remodeling cost that would likely be recovered based on the resale value of the home after the remodel. These five home improvements may be the best option for your investment when it comes to ROI. The main reason for renovating a kitchen, cited by 24% of homeowners, was to improve worn surfaces, finishes and materials. According to the Remodeling Impact Report, 10% of real estate agents said that a completely renovated kitchen recently helped them close a deal, resulting in a closed sale.
While 12% of real estate agents suggest that sellers completely remodel their kitchens, 57% have suggested an improvement to the kitchen. Twenty percent of real estate agents have said that recently an improvement in the kitchen helped to close a deal. In addition to the resale value, kitchen improvements can also help you enjoy the time you spend in your home, as 29% of respondents consider that the most important result of remodeling is improving functionality and habitability. Bathrooms are another place where a home can show its age, and potential buyers may be hesitant about the cost and work involved in remodeling an outdated bathroom after buying a home.
Even so, while 33% of real estate agents have suggested that sellers complete the bathroom renovation before completing the sale, only 4% said that the project had recently helped them close a transaction. The decision to remodel, often more than out of a desire to modernize it, that is, to add a new bathroom, is almost as expensive as completely remodeling a kitchen, but it comes as no surprise to potential buyers. Since only 5% of real estate agents suggest that sellers add a bathroom and only 1% say that the most recent project helped them close a deal, this may be a project that makes more sense for homeowners who plan to stay in their homes for several years. The most expensive project on the list, a new master suite or owner's suite, is another project that may have more value to you while you live in the house instead of making it attractive to future buyers.
Sixty-five percent of those surveyed said they have a greater desire to be home since they finished the project. Only 3% of realtors have suggested that sellers complete the owner's suite before attempting to sell, and less than 1% said that the most recent project had helped them close a deal. The best credit cards for balance transfer The best credit card welcome bonuses The best credit cards for building credit Find the best personal loan for you The best loans for refinancing credit card debt The best personal loans to apply for online Find the savings account for you The best checking accounts of large banks No overdraft fee The best mortgages for a small down payment The best mortgages with no down payment The best mortgages no opening fee The best mortgages with an average credit score The best credit monitoring services Accounts The best checking accounts for small businesses Accounts The best credit cards for small businesses The best tax software for small businesses The best tax software for small businesses The best credit cards for bad credit The best personal loans for bad credit The best debt consolidation loans for bad credit Personal loans if you don't have credit The best credit cards for accumulating credit Personal loans with a credit rating of 580 or a lower credit rating for a credit rating of 670 or lower The best free stock trading platforms Even when they don't buy a repair, most people will end up doing some number of repairs to a new home. According to a recent report from Real Estate Witch, about 95% of homeowners said they plan to undertake a major home improvement project in the next five years. However, only 50% said they could afford it right now.
In some cases, they may get that money back when it's time to sell, but not all home renovations offer the same return on investment. These are more perspectives from the FA Council on how to manage this economy and, at the same time, generate wealth. Contrary to what many people think, most of the projects that offer the greatest benefits in resale value are related to curb appeal rather than to the most glamorous kitchen and bathroom remodels. Only a few projects can offer a 100% return on investment, such as the conversion of a heating, ventilation and air conditioning system to electric, the replacement of garage doors, the installation of a stone veneer and the renovation of a main steel door.
According to Tomalak, with high housing prices and a shortage of homes for sale, more and more people are choosing to fix their current home instead of looking for a new one. While construction and financing costs have increased, this decade could be the golden age of remodeling, said Tomalak. Even so, cost is a critical issue, he added. In addition, financing renovations or improvements will only become more expensive as long as the Federal Reserve continues to raise interest rates to combat inflation.
To get the most out of your investment, talk to a real estate agent in your area about specific renovations that could increase the value of your home and which you shouldn't do, advised Sophia Bera Daigle, executive director and founder of Gen Y Planning, a financial planning firm for millennials. Always get competitive offers for any project and add 10% as a reserve, as additional expenses are likely to arise. If you're planning to finance a project, consider getting a home equity loan or a home equity line of credit and consider the interest rate and potential monthly payment. Be sure to include these monthly payments in your budget before you start, Bera Daigle said.
It might make more sense to postpone a major renovation so you can save money, pay off debt and see if interest rates go down, added Bera Daigle, a certified financial planner and also a member of the CNBC Advisory Board. Finally, consider how long you'll be staying in your current home and how a renovation will affect your life, said Tomalak. Do you have any confidential news? We want to hear from you. Get this in your inbox and learn more about our products and services.
Whether your intentions are to enjoy the bathroom remodel of your dreams or you're getting ready to sell your house, you want your home renovation project to be a worthwhile investment. There are other projects you can do to increase the value of your home: more discretionary and aesthetically oriented remodeling. These are the eight home remodeling projects that offer the highest returns on investment nationwide, according to the report. While some of the best home improvements (a renovated kitchen, a new deck, or a remodeled bathroom) can be expensive, they can also increase the value of your home when it comes to selling or refinancing it.
A home equity loan (HELOC) may be a good candidate to pay for home improvement projects if you have a clear idea of what you want to do and how much it's going to cost, but it comes with some risks. These average amortization ranges for the most common remodeling projects can give prospective sellers a general idea of which projects are most likely to return most of the project cost at the time of the sale. Less risk-averse homeowners who have accumulated sufficient equity in their homes can use financial instruments such as a cash out refinance or a home equity loan to finance their construction projects.
