With home prices soaring, a growing number of homeowners are choosing to upgrade their homes. But experts say not all renovations have the same pay-off.
“When the market is getting hotter, when people’s homes are becoming worth more money, they see investing more money into the home as a solid choice,” David Greene, Real Estate Investor and Agent, said.
If you want the best return on investment on your next home remodel project — ditch the idea of a spa-like bathroom, or magazine-worthy kitchen.
A recent report from the National Association of Realtors and the National Association of the Remodeling Industry said interior projects that recoup the most money are refinishing existing hardwood floors or installing new ones.
The estimated cost of new hardwoods is around $5,000. But with a $6,500 return on investment — 118% of your cost is recovered!
“Change flooring from carpet into hardwood or luxury vinyl flooring — you are much less likely to run yourself into big problems that can drain your budget,” Greene said.
Another project with high R-O-L: an insulation upgrade. With 100% of the cost expected to be recovered.
For comparison, the cost of adding a new primary bedroom suite is estimated at $182,000, with only about $100,000 of that cost recovered.
“One big mistake that inexperienced homeowners or investors make when they’re doing a renovation is they go too grandiose,” Greene said. “It is very common when you start moving walls to find electrical issues that need to be brought up to code, plumbing leaks that you didn’t know existed.”
When it comes to the outside of your house, replacing the roof and the garage doors have the best return on investment — with both recouping all their costs.
Experts said inflation plus material and labor shortages have raised the overall cost of any renovation — both small and large.
Back in 2020, Americans spent $420 billion on remodeling their homes, according to a Harvard University study.