As a discerning homeowner, you understand the importance of maintaining and enhancing the value of your property. With the housing market becoming increasingly competitive, it's essential to take proactive measures to ensure your home stands out. Fortunately, there are a variety of home upgrades that can potentially increase the resale value of your property.
In this article, we provide an in-depth guide to the best home improvements to raise value. Whether you're a luxury homeowner seeking to maximize the value of your high-end property or a standard homeowner looking to increase the value of your starter home, this overview is relevant to you.
Average Return On Investment (ROI) on Home Renovations in 2023: 60%
Citing data from home sales, home values, local GDP, and surveys of real estate professionals across the United States, the 2023 Cost vs. Value Report by Zonda shows that home renovations provided an average 60% ROI upon resale in 2023. Depending on the nature and extent of the project, ROI on home improvements can range from 46.3% to 103%.
What Are the Best Home Improvements to Raise Value?
According to a multiyear trend, home exterior upgrades generally provide better ROI compared to interior projects. This is partially due to the strong concept of “curb appeal” in real estate sales. A home that looks to be in good shape from a buyer’s first impression is likely to have a major influence over the sale.
Let’s look at the top 10 projects that return the most value according to the report mentioned above. Keep in mind that the following resale value data is based on 2023 national averages, and that the exact ROI for a project may fluctuate depending on the location, scope of the project, and quality of work.
HVAC Electrification ROI: 103%
Change traditional furnace to electrified heat pump.
Average Job Cost: $17,747
Average Resale Value: $18,366
Average Cost Recouped: 103%
Garage Door Replacement ROI: 103%
Average Job Cost: $4,302
Average Resale Value: $4,418
Average Cost Recouped: 103%
Replace House Siding with Stone Veneer ROI: 102%
Average Job Cost: $10,925
Average Resale Value: $11,177
Average Cost Recouped: 102%
Entry Door Replacement ROI: 101%
With a steel door.
Average Job Cost: $2,214
Average Resale Value: $2,235
Average Cost Recouped: 101%
Vinyl Siding Replacement ROI: 95%
Average Job Cost: $16,348
Average Resale Value: $15,485
Average Cost Recouped: 95%
Fiber-Cement Siding Replacement ROI: 89%
Average Job Cost: $19,361
Average Resale Value: $17,129
Average Cost Recouped: 89%
Midrange Basic Kitchen Remodel ROI: 86%
Average Job Cost: $26,790
Average Resale Value: $22,963
Average Cost Recouped: 86%
Vinyl Window Replacement ROI: 69%
Average Job Cost: $20,091
Average Resale Value: $13,766
Average Cost Recouped: 69%
Midrange Bathroom Remodel ROI: 67%
Average Job Cost: $24,606
Average Resale Value: $16,413
Average Cost Recouped: 67%
Wood Window Replacement ROI: 61%
Average Job Cost: $24,376
Average Resale Value: $14,912
Average Cost Recouped: 61%
What Factors Influence ROI on Home Improvements?
While home improvements can increase the value of your property, ROI can vary significantly depending on various factors. Understanding these factors is crucial when deciding which upgrades to undertake.
Location and Local Markets
The housing market in your area can impact the value of your property, and upgrades that are popular in one area may not be in another. Therefore, it's essential to consider the local market when deciding on home improvements to undertake.
Size and Scope of the Project
Large, extensive projects such as room additions or complete renovations may provide less ROI than smaller, more targeted upgrades. For example, replacing windows generally provides a better ROI than gutting and rebuilding a kitchen.
Professional Advice and Quality Work
Mediocre workmanship or cheap materials can negatively impact the perceived value of your property, even if you've spent a significant amount of money on upgrades. Therefore, working with experienced and reputable contractors who use high-quality materials is crucial.
A professional contractor can also help you determine the most effective home improvements that add value based on your goals, budget, and local market conditions.
Design Preferences and Trends
With home improvements, it’s essential to consider the balance between personal preferences and broad market appeal. While bathroom, kitchen, and bedroom remodels can still offer a favorable ROI, they can have a lower impact on resale value compared to other projects.
These projects tend to involve customized products that appeal to particular homeowners or clients. While certain design trends can gain broad popularity, aesthetic tastes can vary greatly. Thus, what one homeowner perceives as the perfect luxury kitchen faucet or comforting rustic bathroom may not appeal to another, emphasizing the subjective nature of design preferences.
Other Types of Value to Consider
While the potential resale value of home improvements may be a significant motivation, it's also helpful to consider how home improvements can add other types of value. Here are some other benefits of home improvements, either for yourself, your family, or prospective homebuyers.
Lifestyle Enhancements Improving your home's functionality and aesthetics can provide a better quality of life for you and your family. For example, adding a deck to your backyard can create a beautiful outdoor living space that allows you to enjoy nature and spend time with loved ones. In addition, luxury bathroom and kitchen fixtures can make daily routines more enjoyable, improving the overall quality of life in your home.
Increased Accessibility
Another type of value to consider is increased accessibility. As time goes by, our homes may become less accommodating to our needs, making daily life more challenging. Upgrades that increase accessibility, such as installing a walk-in bathtub or wheelchair ramp, can provide long-term benefits that improve quality of life for years to come.
Accommodating a Growing Family
If it makes sense for you or a potential buyer in your market, consider upgrades that accommodate a family’s needs. For instance, adding an extra bedroom or bathroom can provide much-needed space for a growing family. Similarly, creating a designated play area or outdoor space can provide children with a safe and enjoyable environment to play and grow.
Energy Efficiency
In addition to improving your quality of life, energy-efficient upgrades can provide long-term cost savings on your utility bills. Upgrading to energy-efficient appliances or installing a smart thermostat can significantly reduce your home's energy usage, saving you money and reducing your carbon footprint. Plus, potential buyers are increasingly valuing sustainable features in homes, making energy efficiency upgrades an excellent investment for the future.
Qualified energy efficiency improvements may also be eligible for tax credits. Before you begin an improvement with the intention of receiving a tax credit, be sure to consult a tax professional and research the current state of tax laws.
Expert Advice: Consult With a Professional for Your Home Improvement Projects
As you can see, home improvements that increase value can potentially improve your quality of life and reward you during the resale process. However, it's critical to carefully weigh the return on investment of each project and seek guidance from experts.
For luxury bathroom and kitchen upgrades, you can turn to TD Home Renovations for a virtual consultation for professional advice. As you consider your next project, you might want to incorporate stylish elements such as a green bathroom design to enhance your property. And by planning well and seeking professional support, your home improvement venture can be a triumph that brings value to your life for years to come.
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