Before Picture – Photo Credit: www.curbly.com
Last week a news story came out saying that only 38% of homeowners ever see any increased worth in their homes because of home improvements. It seems that the days of buying a home, renovating it, then flipping it for a large profit are gone, at least for now.
Just because the worth of a home may not improve, it doesn’t mean you should avoid a remodel. The overwhelming majority of us are hoping to stay in our homes for a long time, which means there’s justification for a remodel. If we can afford it, there’s no reason why we shouldn’t be comfortable in our home.
Maybe we don’t spend tens of thousands of dollars on a media room, but we can certainly spend a few thousand on new rugs, new windows, paint, flooring or any other home improvement project you’ve been thinking about.
However, if you are hoping to add some value to your home, there seems to be three things that add the most value. One of those things seems to work everywhere, while the other two seem to be more regional.
The two regional top value adding projects are new windows and adding more dedicated living space to the house. The windows seem to appeal to the northeast, which figures because of the high costs of utilities in the winter, while the South Atlantic seems to love adding rooms such as basement bedrooms.
After Picture – Photo Credit: www.curbly.com
The one thing that seems to work everywhere is fixing up the exterior of the house, especially replacing old siding with newer siding that uses fiber cement.
Two things that most homeowners concentrate on that do not give a good return on investment in today’s market are bathroom and kitchen renovations. These renovations are typically the most expensive, but they do not return the value they once did. Unfortunately, kitchen and bathroom renovations will probably help a home sell faster, so many sellers may be forced to shell out some cash on a bad investment.
Overall, though, if you ever have any thoughts about selling your home for a good price, you’re probably going to have to sink some money into home improvements anyway. Just don’t spend too much if you don’t have to, unless you’re planning on selling staying put for a while and enjoying your nicely renovated home.
See Also:
Home Improvement Calculator – Wells Fargo
2009 – 2010 Cost vs. Value Report – Remodeling Magazine
2007 Cost vs. Value Report – Remodeling Magazine via Zillow.com
(compare remodeling values in the ’07 report vs. the ’09-10 report – huge differences)
Mitch Mitchell is a consultant who writes and participates in many different fields, including real estate finance issues. 
I always tell my buyers that they will get their most money out of their kitchen and bathrooms. Everyone needs them and everyone likes for them to be nice.
I can’t believe that’s the same house! What an amazing transformation!
Smart advice on remodels… So many people put their money into things that are not practical and skimp on the necessities.
It really surprises me that kitchen renovations are considered bad for return on investment. Considering most buyers always start judging a home by the kitchen. If I was doing renovations to my home I would still start with the kitchen.
Great points.
I think that as long as you’re staying in your home…and you want to improve the home while you live there…it’s a GREAT idea to do some upgrades. Not only will you get some of that money back, but you’ll get to enjoy the upgrades and your hard work, over the time that you are in the home.
I still think that kitchen renovations are one of the best areas to drastically improve the value of one’s home (if done correctly).
This is true. I fixed up the exterior of my old house before I sold it, the house value went up over 25% even when I left the interior alone.
There’s nothing wrong with spending money on your home. The problem is, people don’t see it as an investment but instead an inconvenience.
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A relaxing sunroom would be a great addition to this already beautifully restored home.
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Right now people are just interested in getting a good deal on homes and thats probably why it doesn’t help much to do expensive renovations in my opinion.
Regards,
Jan
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WOW! The before and after pics are amazing. You are absolutely right about keeping a home updated. In additional to increasing resale value, the joys of living in a home that has been lovingly cared for is priceless.
@Shirley “Wow” is the right word. I did a double take on those pictures. But it kind of reminds me of those before and after shots in infomercials. A before picture where the subject is sad and not cleaned up. And an after picture where the subject has a professional makeover and a photo shoot.
Remodeling the exterior will definitely add value to the home, but don’t forget about bathroom and kitchen improvements. Bathroom updates in particular always add value to the final home cost.
In the past people who flipped houses, would buy a house at the market price, install new kitchen cabinets for $2000 and resell the house for inflated price of $50k over what they paid for it, because the prices were going up by the day. Now you still can make the return on your remodeling investment, it only takes a little more effort. You just have to pay the right price for the house and not buy it for the market value. And if you are planning to live in the house does it not even matter if the remodel adds value? As a home owner you are remodeling to add comfort to your home and not make money.
You have to remember we are still in the middle of a recession and the housing prices are still a good time away from rising. In a buoyant market its not to unrealistic to think that you could make money doing this.
Its just that now people who would have previously bought a pre-renovate house are looking to save by doing small improvements themselves.
Even in a recession like this, you can still make some money doing this. Anyway, home renovations are always a good place to put your money, especially for the long haul.
Just wanted to address the flipping aspect of real estate. I think one of the best pieces of advice I’ve learned is that you make your money when you buy. I personally know real estate investors who are flipping in this market and making money. You just have to buy at a deep discount so that you can fix it up and sell it under market value. There are deals to be had in this market.
I like receiving my exterior pressured washed. There is practically nothing better that a clear looking residence. But, you do have to becareful I have in the previous truly messed up my deck, by doing my possess pressure washing without having know what I was executing.