Com­par­ing home im­prove­ment ROI

The Morning Call - - BUSINESS CYCLE - By Kayla Dwyer

Top projects based on joy rat­ing

An old real es­tate adage says the kitchen is the most im­por­tant room in the house. But does re­mod­el­ing it give home­own­ers the most re­turn on their in­vest­ment?

By far, the an­swer is no, un­less one con­sid­ers in­creased odds of sell­ing the home enough of a re­turn.

That’s ac­cord­ing to the lat­est Re­mod­el­ing Im­pact Re­port from the Na­tional As­so­ci­a­tion of Real­tors, which com­piled data from in­dus­try pro­fes­sion­als and home­own­ers about 20 home im­prove­ment projects and ranked them ac­cord­ing to a “joy” rat­ing and a re­turn on in­vest­ment.

The two mea­sure­ments don’t al­ways align.

A com­plete kitchen ren­o­va­tion re­ceived the high­est joy score, a 10 out of 10. Al­most all sur­vey re­spon­dents said they had a greater de­sire to stay in the home, or at least a greater sense of en­joy­ment liv­ing there, after the project. Ten percent of agents said do­ing so helped in clos­ing a home sale.

But the av­er­age cost of a com­plete kitchen re­model, ac­cord­ing to a sur­vey of Na­tional As­so­ci­a­tion of the Re­mod­el­ing In­dus­try mem­bers, is $68,000. Real es­tate agents es­ti­mated about $40,000 is re­couped when the home is sold. That’s a 59% re­turn on in­vest­ment.

Home­own­ers fare worse when they spend the av­er­age $38,300 on a kitchen up­grade, such as im­prov­ing worn-out sur­faces and fin­ishes. This project re­ceived a joy score of 9.7 but a 52% ROI. Still, 20% of agents said kitchen up­grades helped sell a home.

The most fis­cally ad­van­ta­geous home im­prove­ment project is usu­ally some­thing home­own­ers think of once a quar­ter cen­tury: roof­ing.

Only 65% of home­own­ers re­ported a greater de­sire to live in their home after get­ting new roof­ing, giv­ing it a joy score of 9.5. But agents es­ti­mate the av­er­age $7,500 roof­ing project re­turned $8,000 into the home’s re­sale value, a 107% re­turn.

Plus, a third of agents said it helped close the sale.

The costs and val­ues in the NAR re­port are based on the av­er­age-size home built after 1981 with no hid­den issues, us­ing mostly stan­dard-qual­ity ma­te­ri­als.

Won­der­ing about the re­turn on in­vest­ment for re­plac­ing your HVAC sys­tem, con­vert­ing the base­ment to a liv­ing space or re­plac­ing your garage door? Read the en­tire re­port at the Na­tional As­so­ci­a­tion of Real­tors web­site.

Morn­ing Call re­porter Kayla Dwyer can be reached at 610-820-6554 or at kd­[email protected] COM­PLETE KITCHEN REN­O­VA­TION

MARUNOV ZAKHAR/DREAMSTIME

Which home ren­o­va­tion projects make the most bang for your buck? A new re­port from the Na­tional As­so­ci­a­tion of Real­tors has de­tails. Joy score: 10 Av­er­age cost: $68,000 Av­er­age ad­di­tion to re­sale value: $40,000 ROI: 59% Joy score: 10 Av­er­age cost: $6,300 Av­er­age ad­di­tion to re­sale value: $2,500 ROI: 40% Joy score: 9.8 No av­er­age costs or added value pro­vided Av­er­age cost: $7,500 Av­er­age ad­di­tion to re­sale value: $8,000 ROI: 107% Joy score: 9.5

EMILY PAINE/THE MORN­ING CALL

The most fis­cally ad­van­ta­geous home im­prove­ment project is usu­ally some­thing home­own­ers think of once a quar­ter cen­tury: roof­ing. Av­er­age cost: $4,700 Av­er­age ad­di­tion to re­sale value: $5,000 ROI: 106% Joy score: 9.2 Av­er­age cost: $2,600 Av­er­age ad­di­tion to re­sale value: $2,600 ROI: 100% Joy score: 9.5

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