What home improvement offers the most return on investment (ROI)?
Homeowners constantly ask this question. And they have good reasons for doing so. Considering the cost of the simplest home upgrade, owners want to know that the money they spend on an improvement is worth it.
Two of the home improvements that constantly rank highest with homeowners are bathroom and kitchen renovations. In this post, Paramount Management in Chandler takes a look at the potential increase to the value of a home for both bathroom and kitchen renovations.
But first, do home improvements actually boost the value of a home? The idea behind renovating parts of a home is to pass a good portion of the improvement costs to future buyers in the form of increased property values. But this is not always the case.
Sometimes a home upgrade will only deliver benefits in the form of additional space, better ambience, and greater enjoyment of the property. It may not result in a higher selling price.
Kitchen and bathroom renovations are two notable home improvements that actually increase the selling price of a property.
How kitchen renovations affect the value of a home
Among property owners, a kitchen renovation consistently ranks as the most desirable home upgrade. This is partly because of the amount of time families spend inside the kitchen.
Given that a kitchen serves a secondary dining room, a place for receiving guests, and a family’s favorite spot for swapping gossip, this is understandable.
The second reason why kitchen upgrades are so popular is that a properly-executed upgrade can help a home sell faster. An updated kitchen will make a house stand out from otherwise similar properties.
The majority of buyers say that they are willing to pay more for a home if it has a kitchen that has been thoughtfully upgraded and improved with high-end finishes.
An average of 69% of buyers who did not buy homes with recently-upgraded kitchens said they would have paid more for a kitchen with new appliances. While 55% reported that they would have paid more if the kitchen had granite counters.
As much as 80% of buyers also list an improved kitchen as one of their top priorities when buying a house. Property owners can expect to recoup between 60% and 80% of the cost of an upgrade, depending on the extent of the renovation.
All kitchen renovations do not yield the same level of ROI, some upgrades put more money back in the owner’s pockets than others. Upgrades that cost very little but deliver fairly significant ROI include:
– Updating cabinet hardware
– Changing the lighting
– Repainting cabinets
Other than these simple upgrades which do not require a lot of work or money, there are larger- scale upgrades that can cost anywhere from $21,000 (for a smaller upgrade) to $126,000 (for an upscale upgrade).
In between is the mid-range remodeling which costs around $75,000. For upscale upgrades, owners can hope to recoup a little over 54% of their costs, which is $68,000.
For minor upgrades owners should expect to get back $17,000 of the $21,000 they spend; an ROI of 81%. The average ROI of a kitchen upgrade is 69% of the cost of the upgrade.
How bathroom renovations affect the value of a home
After kitchen renovations, the second most in-demand home upgrade is bathroom renovations. As with kitchen remodels, a bathroom upgrade makes a home more livable and increases its selling price.
The two principal elements in most bathroom renovations are improvements to the functionality and styling of the space. A remodeled bathroom is an additional selling point that helps a home stand out from other properties of comparative value. It is one of the major factors that influence the buyer’s decision to purchase a property.
A bathroom renovation can range from minor cosmetic improvements like painting and cabinets refinish, to more expensive upgrades like putting-in a Jacuzzi tub and adding a steam shower.
Some estimates claim that for every dollar that owners spend doing-up their bathrooms, they can expect to see as much as a $1.71 increase in the value of their property. While every renovation will not fetch this kind of ROI, most bathroom upgrades will significantly boost the value of a property.
The average ROI for bathrooms stands between 57% and 69%, depending on the type of upgrade undertaken.
A bathroom remodeling project can cost anywhere from $6,000 (for minor remodeling) to $60,000 (for an upscale remodel). The average bathroom upgrade will require an investment of a little under $18,000. But when changing only fixtures and backsplash, the cost should not exceed $12,000, and can be as low as $3,000.
Whether the renovation project is partial or a complete overhaul, homeowners can expect to recoup at least 50% of their cost. The bathroom upgrades which deliver the highest ROI are replacing old flooring with porcelain or ceramic tiles, updating the vanity with granite countertops that feature modern sink and faucets, replacing cabinet hardware, and adding a walk-in shower or glass doors to the shower and tub.