Did you know that only one kind of home renovation project creates more home value than it costs to carry out? That might come as a bit of a surprise. After all, mainstream thinking considers home improvement work a wise investment.
Americans are proud homeowners who routinely pour over $400 billion a year on home renovations! That's a lot of cash.
It works out to close to $5,000 per year for each one of the American homeowners. And for many of them, these home renovations represent one of the most significant single chunks out of their yearly spending budget.
This level of spending does make sense. Home is far more than a sanctuary. It often represents an investment, a safety net, and a retirement plan. Almost every homeowner wants to take care of their property, keep it in good condition, and periodically spruce things up - whether they're selling or staying.
It's natural for homeowners to feel safe investing their money into their homes. Aside from a few renovating purely for personal enjoyment, most are expecting a healthy return on what they've put in.
However, that's not always the case. It isn't even the norm!
Most renovations don't pay off in a selling value high enough to recoup their costs. Not only that, but many renovations are simply bad investments that can lessen a home's selling power.
So, do you know which projects deliver the best return on investment? It's a good idea to find out before you start throwing a hammer around.
We'll cover that in a moment, but first, let's go over what Americans typically choose to put their renovation money into.
According to one home industry outlet, the ten most popular home renovations are:
Some of these renovations are cosmetic. Others are to make a home safer, improve its efficiency, make the interior a little more contemporary, or take care of needed repairs.So, are these the ones that deliver a positive return on investment?
The National Association of Realtors and the National Association of the Remodeling Industry took a deep dive into the average cost recovery of standard exterior and interior home renovation projects. Here's what they found.
The ROI of Exterior Home Renovation Projects:
The ROI of Interior Home Renovation Projects:
This report isn't an outlier. Housing industry intelligence consistently shows that only a few home renovation projects are suitable financial investments.
Many remodeling projects will enhance the quality of life and add to a home's ambiance, but those generally don't translate into monetary returns.
Creating a new bedroom might be suitable for a young family who wants to grow in place, but the next buyer might find it a little too small. A new bathroom addition can quash early morning arguments in a large family, but the next buyer might find it unnecessary or think it's in an awkward location.
Touching up a home's exterior doors, windows, and siding can undoubtedly add to the curb appeal, but that isn't shown to create much ROI.
Only a handful of home improvement projects have proven to bring back at least as much value as they cost. Those are:
Homeowners who choose to work on the home's exterior purely for financial investment purposes are wasting their money unless they need to do a roofing or garage door replacement.
It's also a pretty good idea to replace old insulation - especially since that can improve the home's energy efficiency.
However, there's only one way for homeowners who want to invest in a home renovation that will make them some money.
It's a classic hardwood floor.
The 2022 remodeling impact study found that hardwood flooring refinishing and installation renovations resulted in a positive ROI.
A hardwood flooring refinishing project that costs $3,400 to complete was estimated to bring in around $5,000. That's 174% ROI. A new wood flooring installation project that costs approximately $5,500 to complete was estimated to bring in roughly $6,500 in recovered costs, putting this ROI at 118%.
Once the flooring was complete, virtually every homeowner wanted to spend more time at home and took more enjoyment in their dwelling space.
There's always more than money at stake when it comes to our homes and living spaces. True home investment enhances the livability while adding to its valuation.
That's the true allure of hardwood flooring. It's a beautiful and durable way to improve a home's value and elevate your living space.
Hardwood flooring has always been perceived as a premium home product. Unfortunately, its product and service pricing often reflects that. Many homeowners choose to stick with second or third-rate flooring options.
Today, homeowners across the country now have a way to get hardwood flooring installed or refinished at affordable prices. It's through our wood floor franchise: Footprints Floors.
Footprints Floors provides quality hardwood flooring installations, repairs, and refinishing without the high markups or premium fees!
Our home improvement franchises are tightly run. We don't stock inventory and then charge a fee to make up for storage costs. And our home-based franchises don't have expensive real estate overhead costs that we need to recoup monthly.
We simply focus on providing our customers with excellent service. That's what makes us different.
