There are many reasons why a homeowner might want to renovate their space, from wanting new, exciting features and upgrades to correcting oversights or repairing what has degraded over time. This desire to renovate is usually attributed to an unfulfilled want or need concerning the home.
Pair these wants and needs with the drive to increase the resell value of the home and you have the perfect recipe for home renovations. Renovations can be a tricky business, however, particularly when it comes to separating your needs from your wants (which can often blur together). Thankfully, there is an additional tool on hand to give you insight into how much a renovation might add to the overall value of your home: the ROI or return on investment.
Using the ROI as a benchmark, you can examine the numbers with a critical eye to help you finalize and prioritize your renovation goals. Often, a look at the numbers can help you determine whether a particular renovation is a critical must-have or whether it can wait its turn in favor of other home-improvement projects.
To help you out, we've compiled a list of some of the most sought-after renovations in the market today, along with their ROI percentages and commentary on how those numbers have changed from 2023.
When it comes time for you to dive into your renovation to-do list, we're here to help you find the solution that makes sense for you, your family, and your unique circumstances. So, if you are ready to get going on home renovations of practically any scope from the minor to the extensive, we recommend speaking to one of our loan officers. We have many different types of renovation products and options to help you bring the best version of your home from your imagination to reality. With that in mind, let's dive in.
Worth vs. value
It's no secret that home renovations can be expensive and invasive. The latter is especially the case if you work from home. Depending on the intensity and complexity of the renovations in question, you might find that you need to relocate the family while renovations are underway. It can likewise take some time after the renovations are over to get some sense of normalcy back.
We mention these factors not to put you off of renovations but to make sure that you factor these aspects into your thinking. After all, whether renovations add value to your home and whether they are worth it to you can be two very different things.
With that in mind, there are two things you should ponder before embarking on your home's journey of renewal. For each renovation, consider the following:
- The total cost of the renovation vs. the quality of life it will add
- The renovation's worth in terms of the value it will add to your home
Ultimately, whether a particular renovation is worth the cost and interruption is highly subjective. There's nothing wrong with making a renovation simply because you want it or because it brings you joy. The list we've prepared here with the ROI numbers is simply to give you a framework so that you can get an at-a-glance view into how much popular renovations can add, on average, to the value of your home.
ROI numbers
Return on investment (ROI) for home renovations is measured by how much of the cost of a particular renovation is recouped once the house is sold relative to how much it costs overall. The ROI numbers presented here are national averages. These can vary from region to region depending on a number of factors, so bear that in mind as you read, and categorize them as estimations.
So, let's take a look at Remodeling magazine's yearly release of their Cost vs. Value report.1 With that as our guide, here are the relative ROI rates of some of the most popular renovations:
HVAC Conversion/Electrification:
- Cost: $18,800
- Value added: $12,422
- ROI: 66.1%
Our first item on this list is one that proved quite popular last year with a 103.5% ROI. That number fell to 66.1% in 2024, however. While there are any number of factors that could affect why converting a home's HVAC system from fossil fuels to purely electricity could have fallen off so much in a year, this does prove one of the biggest downward changes from 2023.
Something to note, however, is that such a renovation's ROI is never more relevant than in the year that the house is sold. So, if you just completed this type of upgrade, but don't think you'll sell your house for a few more years, don't worry. Historically, this is one of the most reliable and sound renovations.
Garage Door Replacement:
- Cost: $4,513
- Value added: $8,751
- ROI: 193.9%
In sharp contrast to the HVAC conversion, replacing your garage door has skyrocketed in value since last year. In 2023, this renovation already boasted an impressive rate of 102.7% value, meaning that the renovation effectively paid for itself and then some. Now in 2024, the ROI is an incredible 193.9%! Considering that this type of upgrade has the lowest costs on this list, it makes it an ideal starting place for homeowners beginning their suite of renovations.
Manufactured Stone Veneer:
- Cost: $11,287
- Value added: $17,291
- ROI: 153.2%
Another renovation that had over a 100% ROI last year, a manufactured stone veneer on the exterior of a home has continued to rise in popularity in a big way. From 102.3% in 2023, its ROI increased to 153.2%. Considering the relatively low price overall, this is another way that homeowners can dramatically spruce up the appearance of their home at first glance while increasing the property value. It also goes to show the enduring power of curb appeal to potential buyers.
Minor Kitchen Remodel - Midrange:
- Cost: $27,492
- Value added: $26,406
- ROI: 96.1%
Major Kitchen Remodel - Midrange:
- Cost: $79,982
- Value added: $39,587
- ROI: 49.5%
Major Kitchen Remodel - Upscale:
- Cost: $158,530
- Value added: $60,176
- ROI: 38.0%
So far, we've covered renovations that have undergone radical changes, both up and down. All three kitchen remodel types, however, do show differences from 2023, though perhaps not to as great of a degree.
Overall, all three increased slightly in price. (That's pretty common across the board when you factor in general inflation and economic factors.) The ROI ticked up for all three as well. The midrange minor remodel was the clear winner of the three with its ROI going up to 96.1%, a 10.4% increase from last year. Both the midrange major remodel and the upscale remodel did increase by around 7% from last year, but their overall ROI numbers are far lower for the effort and resources involved at 49.5% and 38%, respectively.
Still, the kitchen is likely the first thing a potential buyer might notice in a house without furniture, and the advantages of having a fully modernized and upgraded kitchen while you're living in the house can seldom be overstated.
Siding Replacement
Fiber cement:
- Cost: $20,619
- Value added: $18,230
- ROI: 88.4%
Vinyl:
- Cost: $17,410
- Value added: $13,957
- ROI: 80.2%
As we stated earlier, curb appeal is a tried-and-true approach to hook your buyer before they even set foot in the house itself. The stone veneer is one way to increase that perceived value, but siding is another way to beautify and protect the exterior of the home. Not surprisingly, both types of siding have solid ROI numbers behind them this year. Fiber cement was largely unchanged, with only a 0.01% drop in ROI from last year.
Vinyl, while still viable, did see its own ROI drop by 14.5% to its current position at 80.2%. This would suggest that the increased durability and fire-resistance of fiber cement over vinyl siding are more attractive options to renovators looking to preserve their homes against the elements.
Window Replacement
Vinyl:
- Cost: $21,264
- Value added: $14,270
- ROI: 67.1%
Wood:
- Cost: $25,799
- Value added: $16,222
- ROI: 62.9%
Next, we look at a category that is very close in both average price and ROI to what they were a year ago. Both types of window replacement increased slightly in price (again, not a surprise). Where they differ, however, is that the ROI for vinyl window replacements dropped by 1.4% to settle in at 67.1%. On the other hand, wood window replacements increased by 1.7% to 62.9%. Not a severe change either way, though it is interesting to note how housing accessories do seem to be trending away from vinyl.
Deck Addition
Wood:
- Cost: $17,615
- Value added: $14,596
- ROI: 82.9%
Composite:
- Cost: $24,206
- Value added: $16,498
- ROI: 68.2%
Decks have long been an in-demand home feature across the country, particularly in the warmer months when summer get-togethers and cookouts are the norm. It seems that decks of both the wood and composite types have seen a jump in their ROI numbers. Though changing very little in price, their return-on-investment numbers have increased from 50.2% to 82.9% for wood and 39.8% to 68.2% for composite. While these numbers may not be as high as other renovation types, their sharp increase would seem to tell the tale that the demand for decking is on the rise.
Bath Remodel
Midrange:
- Cost: $25,251
- Value added: $18,613
- ROI: 73.7%
Universal Design:
- Cost: $40,750
- Value added: $20,148
- ROI: 49.4%
Upscale:
- Cost: $78,840
- Value added: $35,591
- ROI: 45.1%
When it comes to remodeling your bathroom, there's definite good news and bad news here. The good news is that — overall — all three scales of bathroom remodel have remained close to their price tags from last year while increasing in ROI. The downside is simply that the more upscale the renovations, the lower the ROI numbers become. This was the case in 2023 as well. The upscale bathroom remodel clocks in at the lowest of the three at 45.1%, though that number is up from 36.7% previously.
Primary Suite Addition
Midrange:
- Cost: $164,649
- Value added: $58,484
- ROI: 35.5%
Upscale:
- Cost: $339,513
- Value added: $81,042
- ROI: 23.9%
Adding or overhauling the space of the primary suite of your home can definitely be an extra draw for would-be homebuyers. Whether that takes the form of adding a new bedroom, installing a gas-powered fireplace with its own chimney, rearranging the internal configuration of your home or all of the above, you're adding features that could help your home sell quickly.
In the spirit of caveat emptor (Latin for "let the buyer beware"), however, the high price tag of such a monumental undertaking may not favor a return on the kind of money it takes to make such a change. In both categories, the ROI percentage did increase, but we hasten to add that the ROI tends to be low relative to the cost. The upscale category, for example, has the lowest ROI of any on this list at just 23.9%, but also has the highest price of any entry here as well. So, if you plan to make such a change to your home, be prepared for it to only give back a third or quarter of what you put into it.
Final thoughts
Once again, the ROI may not be the end-all, be-all deciding factor for you. Some renovations may be necessary, such as to accommodate the addition of a new family member, whether a baby or an elderly relative. Or perhaps you just need to liven up the space to give you some much-needed quality-of-life improvements. Regardless of why you may want it or need it, the ROI is just there to help you make a more informed decision on how you proceed. Ultimately, if you think a renovation is warranted, go for it. It's your home, after all.
Originally Posted by By Matt Carson on 6/7/2024 via Zach Kwakenat of Guaranteed Rate Affinity
1 © 2024 Hanley Wood Media Inc. Complete data from the Remodeling 2024 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.
