Renovations have the ability to make us happier in the places we call home, but some updates can add more value than others when it’s time to sell or refinance.
Some of the best home renovations — think an updated kitchen, new deck or remodeled bathroom — can get pricey. That’s why it’s helpful to know what kind of return you might expect before you decide to take on a remodeling project.
The best home renovations in 2020
The 2020 Cost vs. Value Report from Remodeling magazine looked at 101 U.S. markets and compared the average cost of 22 remodeling projects to see which retains its value at resale, based on a survey of 3,000 real estate agents and firms. Here are the six home remodeling projects that deliver the highest returns.
1. Manufactured stone veneer
- Average cost: $9,357
- Average resale value: $8,943
- Cost recouped: 95.6 percent
Replacing vinyl siding with stone veneer on part of your home, such as an entryway, is a big curb-appeal upgrade. The average cost estimate is based on factors such as installing 36 linear feet of sills, 40 linear feet of corners and one address block, and materials including two separate layers of a water-resistant barrier and corrosion-resistant lath and fasteners.
This cosmetic improvement and accent design element is likely to catch the eye of a potential buyer, and can allow you to recoup more than 95 percent of your renovation costs.
2. Garage door replacement
- Average cost: $3,695
- Average resale value: $3,491
- Cost recouped: 94.5 percent
A good-looking garage door is high on the list when it comes to getting cash back on your investment. The estimate for this job is based on the cost of removing and disposing of an existing 16-by-seven-foot garage door(s) and replacing it with a new four-section garage door with heavy-duty galvanized steel tracks, and assumes you’re reusing the motorized garage door opener.
This curb-appeal enhancer will get you back around 94.5 percent of what you spent on it when you sell your home.
3. Minor kitchen remodel
- Average cost: $23,452
- Average resale value: $18,206
- Cost recouped: 77.6 percent
Creating a modern-looking and functional kitchen can add more than just value to your home: It can boost your enjoyment of everyday activities like cooking, entertaining friends and sharing meals with your family.
Potential buyers also see the intrinsic value of this kind of upgrade. You’ll recoup a little more than 77 percent of the cost of a minor kitchen remodel, on average. In a remodeling project of this kind, you might replace appliances with new, more energy-efficient models; reface cabinets with new shaker-style wood panels; install new countertops and a new sink and faucet; replace hardware; add new flooring and repaint the walls.
4. Siding replacement (fiber-cement)
- Average cost: $17,008
- Average resale value: $13,195
- Cost recouped: 77.6 percent
Old, dilapidated siding can make even the nicest house look worn-out. For the average home, replacing 1,250 square feet with new fiber-cement siding will cost you just over $17,000, and you’ll get back more than three-quarters of that investment upon resale. This upgrade includes all 4/4 and 5/4 (a fraction measuring thickness) trim.
5. Siding replacement (vinyl)
- Average cost: $14,359
- Average resale value: $10,731
- Cost recouped: 74.7 percent
Vinyl siding replacement can help freshen a home’s exterior and may be a more budget-friendly solution compared to fiber-cement siding. The $14,359 average cost estimates replacing 1,250 square feet with the new siding, and you should get back roughly 74 percent of that investment upon resale.
6. Window replacement (vinyl)
- Average cost: $17,641
- Average resale value: $12,761
- Cost recouped: 72.3 percent
You could recoup around 72 percent of the cost to replace your current windows if you install low-E, simulated-divided-light vinyl windows that feature a custom-color exterior finish. (Low-E means low emissivity, an energy saver.) You’ll want to ensure that the trim exterior matches existing ones, and the interior trim is left untouched. The average cost for this type of renovation will set you back around $17,000.
Why homeowners should consider a home renovation
Remodeling your home adds to your enjoyment, but it can also boost your home’s value over time, too.
When you refinance your home, for instance, renovations will be taken into account when a property appraiser assesses your home’s current market value. A higher home value means you’ll have more equity and a lower loan-to-value ratio. You might even be able to cancel private mortgage insurance payments earlier than anticipated.
When you sell your home, buyers will want to see a clean, well-kept home with modern updates that’s move-in ready. Plus, if you live in a competitive housing market, your listing might be competing with other upgraded homes for buyers’ attention.
How much you should invest in home renovations
Before you shell out big bucks for custom updates in your home, having a solid understanding of what renovations yield the highest return for the money is key. You also have to take into account your budget and your renovation goals to ensure you can be as efficient as possible, since remodeling professionals will need this type of information when meeting with you.
It’s important to keep in mind that costs can vary greatly by region based on the cost of labor and materials, as well as the level of service offered.
Still, there is some value in adding personal touches, even if it’s the fact that you’ll get enjoyment from your renovations while you’re the homeowner.
Photo Adobe Stock/Illustration by Bankrate