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A report highlights home remodeling projects that have yielded the highest historical return on investment. Discover which renovations maximize home value and offer the most profitable outcomes.
KEY POINTS
Home renovation activity has slowed somewhat from its pandemic-era peak, but homeowners are still investing in their properties, especially as the spring housing market picks up.
According to the 2024 Cost vs. Value report from Zonda Media, some renovation projects now offer the highest returns in history. Certain home upgrades are averaging returns of nearly 200% for the first time.
Garage door replacements have the highest average return at 194%, followed by upgrading to a steel front door with a 188% return on investment, nearly double their values from last year, the report found.
Forget about designer chef’s kitchens; the projects offering the highest resale value returns are primarily related to curb appeal, rather than glamorous kitchen and bath remodels, according to Zonda’s report.
In fact, nine out of the top ten projects with the highest return on investment were exterior improvements, the report found.
“Exterior replacement projects continue to make the most sense for adding resale value to a home,” stated Clay DeKorne, chief editor of Zonda’s JLC Group.
However, with rising construction labor and building material costs, not all homeowners will see a full return on their investment.
Only three projects on Zonda’s list typically deliver a 100% return on investment: replacing garage doors, upgrading to a steel front door, and installing a stone veneer.
“Discretionary projects like an upscale bathroom or kitchen remodel may feel valuable to those making the selections but won’t provide nearly as much return to sellers,” DeKorne said.
A minor kitchen remodel, such as painting and updating the backsplash, provided high returns, recouping 96% of the costs. However, major upscale kitchen and bathroom remodels did not fare as well, with returns of 38% and 45%, respectively, according to the Zonda survey.
“Expensive kitchen upgrades aren’t going to pay off,” said Angelica Ferguson VonDrak, an associate real estate broker based in Rhinebeck, New York.
With high home prices and a limited supply of homes for sale, sellers need to be especially strategic to attract buyers willing to pay top dollar, according to Todd Tomalak, Zonda’s principal of building products research.
Additionally, financing renovations with a home equity loan or line of credit has become more expensive due to the Federal Reserve's 11 rate
To maximize your return on investment, consult with a local realtor about specific renovations that may increase your home's value and which ones to avoid, advised Angelica Ferguson VonDrak.
In some regions, adding a pool could triple your investment, while in others, it may not be worth it, she noted.
“The less glamorous upgrades are more important,” VonDrak said, such as converting an HVAC system (replacing a fossil-fuel-burning furnace or boiler with an electric heat pump), or installing a new roof or windows.
Often, a thorough cleaning can make a significant impact. “Certainly decluttering and swapping out old furniture for new or adding slipcovers,” she said. “You want everything to feel fresh and new.”
Source: CNBC
