Are you considering a home remodel? With Americans spending a whopping $420 billion on home renovations, it’s clear that enhancing and adding value to homes is a top priority for many. But before you jump into that remodeling project, let us help you make informed decisions.
In a joint study, the National Association of Realtors (NAR) and the National Association of the Remodeling Industry (NARI) analyzed the cost recovery for interior remodeling projects, uncovering some fascinating insights. Join us as we explore the top remodeling projects based on their potential value and cost recovery when it’s time to sell your home.
Why Remodel?
As homeowners, we all have different reasons for wanting to spruce up our living spaces. Perhaps we’re tired of outdated finishes, are transitioning to a new family unit arrangement, or just want to add new features to make the home more functional. Despite individual preferences, the NAR/NARI study indicated that a staggering 84% of homeowners are pleased with the overall result and have a greater desire to live in their homes after remodeling. Renovation projects that resulted in increased enjoyment and a desire to stay home received high “Joy Scores,” with ten being perfect, reflecting how happy homeowners are with their renovation projects.
Home renovations also offer homeowners the opportunity to increase the value of their property, making it a more attractive prospect to potential buyers or renters. This is particularly important for those looking to sell their house or convert it to a rental property, as the added value can translate into a higher selling price or rental income.
However, it’s important to note that not all renovations guarantee increased value. To make sure you’re investing your money wisely, it’s important to carefully consider which renovations are most likely to yield the highest recovery of your investment. Plus, with the right guidance and expertise from a design-build studio like Everything Home, you can ensure that your renovation project is executed flawlessly, leaving you with a beautiful and functional space that you can enjoy for years!
Here are the top 11 interior renovations most likely to add value to your investment.
11 High Cost Recovery Remodeling Projects
1. Hardwood Flooring Refinish
Percent of value recovered from the project: 147%
Joy Score: 10
Refinishing your hardwood floors often makes a great impact on the look of your space while being surprisingly affordable. On top of that, it can be an effective way to impress potential buyers and increase your home’s value. As flooring is often one of the first features that catch the eye of a prospective buyer, having newly finished hardwood floors can add a polished and move-in-ready look to your home. This makes it a high-cost recovery improvement that can be beneficial when selling your home. The survey estimates that for a Hardwood Flooring Refinish cost estimate of $3,400, the cost recovery is nearly $5,000, making it one of the best cost recovery improvements for your home. Your future buyer will essentially be buying you new floors and putting extra money in your pocket.
2. New Wood Flooring
Percent of value recovered from the project: 118%
Joy Score: 10
If you’re seeking to revamp the appearance of your living space, replacing your floors with new wood flooring may be a desirable option. Despite being a more costly alternative, with expenses averaging around $5000, the potential return on investment is substantial. According to surveys, homeowners recouped 118% of their expenses. Moreover, this improvement received a perfect Joy Score of 10, indicating high levels of satisfaction among homeowners.
3. Insulation Upgrade
Percent of value recovered from the project: 100%
Joy Score: 10
Proper insulation is crucial for maintaining a comfortable living environment and reducing energy costs. A poorly insulated home can lead to higher heating and cooling expenses, making it an unappealing prospect for potential buyers. Upgrading your insulation before selling your home can be a smart investment, costing around $2,500 and yielding an ROI of 100%. This is due to the significant energy cost savings and increased resale value of the home. Homeowners can achieve these benefits by air sealing and insulating their homes, leading to increased comfort and reduced energy bills. It’s no wonder that NAR reports a Joy Score of 10 among homeowners who have made this upgrade.
4. Basement Conversion to Living Area
Percent of value recovered from the project: 86%
Joy Score: 9.7
Imagine turning your dark and damp basement into a stunning living space that gives you more living space and functionality. From an elegant home bar to a cozy bedroom, the possibilities are endless. Additionally, it’s an ideal area for kids to play away from adult spaces and perfect for adding entertainment zones such as home theaters or game rooms. A basement renovation can be the key to unlocking your home’s potential and capturing the hearts of buyers.
The cost of remodeling a basement can vary depending on the state of the existing space, size, level of luxury, permits, and labor costs. However, experts estimate an average cost of $57,500. The good news is that your cost recovery could go up to around $49,250, an 86% ROI with a Joy Score of 9.7. So why not transform your basement into the ultimate living space and enjoy the benefits of a higher resale value and a more joyful home life? For a net cost of just $8000, you can literally live in a much larger space for years to come.
5. Closet Renovation
Percent of value recovered from the project: 83%
Joy Score: 10
If you are tired of cramming your clothes into tiny, cluttered closets, it’s time to consider upgrading your closet space! Custom closets may come with a price tag of around $6,000, but the investment pays off. Homeowners can recover up to $5,000 of their costs with an impressive 83% ROI. Plus, you’ll enjoy a spacious and luxurious look that will impress potential buyers seeking an organized living space. So, don’t overlook the power of a renovated closet – it can make a big impact on the value and appeal of your home.
6. Attic Conversion to Living Area
Percent of value recovered from the project: 75%
Joy Score: 10
An attic conversion is an excellent way to increase living space in a home, and it’s also an investment that pays off. With the potential to add a bedroom, home office, or even a recreational area, an attic conversion is an upgrade that can provide substantial value. Although the project cost may be high, with estimates of up to $100,000, the investment can be worth it. The cost recovery for this project is estimated at $75,000, with an ROI of 75%. Homeowners who opt for this upgrade report high satisfaction with a Joy Score of 10.
7. Complete Kitchen Renovation
Percent of value recovered from the project: 75%
Joy Score: 9.8
The kitchen is not just a place where you cook food; it’s where you gather with family and friends to create lifelong memories. So, why not consider a complete kitchen renovation to turn it into the heart of your home? Although it comes with an average price tag of $80,000, the joy it brings can be priceless. With a typical ROI of 75% and a Joy Score of 9.8, it’s hard to go wrong. A rehaul with high-end appliances and new cabinets, and other smart features can give your new kitchen a fabulous, stunning appeal.
8. Bathroom Renovation
Percent of value recovered from the project: 75%
Joy Score: 9.8
Want to transform your bathroom into a luxurious and stylish oasis with a complete tear-out and replacement of all bathroom walls, fixtures, and appliances? According to the survey, the average cost of a bathroom renovation is $35,000. But don’t let the price tag scare you away, as this investment can give you a cost recovery of $25,000 while adding significant value to your home and attracting potential buyers. Homeowners who have undergone a complete bathroom upgrade report a Joy Score of 9.6 and a 75% ROI.
9. Kitchen Upgrade
Percent of value recovered from the project: 75%
Joy Score: 9.8
The kitchen is often considered the heart of the home, and for many homeowners, it’s where they spend a significant amount of their time. As a result, a kitchen upgrade can be a significant investment, but it can also pay off in terms of enjoyment and resale value. According to the survey, the average cost of a complete kitchen renovation is around $45,000. This includes everything from new countertops and cabinets to updated appliances and lighting.
While this may seem like a weighty price tag, a kitchen upgrade can provide a 67% ROI, with a cost recovery of around $30,000. If you sell your home after the renovation, you can expect to recoup a significant portion of the cost. Moreover, the report found that homeowners who completed a kitchen upgrade reported a Joy Score of 8.2 out of 10, indicating a high level of satisfaction and enjoyment with the new space.
10. Add New Bathroom
Percent of value recovered from the project: 63%
Joy Score: 8.2
Are you tired of fighting for bathroom time with your family or guests? Adding a new bathroom may be the answer to your prayers! While it’s a significant investment, costing around $80,000, it can add value to your home and make your daily routine much more enjoyable. Plus, a new bathroom can be a major selling point when it comes time to put your home on the market.
According to the National Association of Realtors, adding a new bathroom has a cost recovery amount of $50,000, which translates to a 63% ROI. That means you can recover a good portion of your investment when you sell your home. And, with a Joy Score of 8.2%, homeowners who have added a new bathroom report a high level of satisfaction with the result. Don’t underestimate the value of a well-planned and executed bathroom addition – it may be just the upgrade your home needs.
11. Add New Primary Bedroom Suite
Percent of value recovered from the project: 56%
Joy Score: 9.5
Imagine waking up in your new, spacious primary bedroom suite every morning! For many homeowners, this dream becomes a reality with a major investment in their home. The survey reports that adding a new primary bedroom suite can have a Joy Score of 9.5, meaning that homeowners experience a high level of satisfaction with the renovation.
While the cost of adding a new primary bedroom suite can be significant, averaging around $172,500, the good news is the cost recovery. Homeowners can expect to recover around $100,000 of the cost, resulting in a 56% ROI. Not only will you enjoy the comfort and luxury of a new primary bedroom suite, but your future homebuyers will pay for over half of your investment!
Maximizing Your Investment Returns
As we have seen, there are many other ways to increase the value of your home. In fact, even adding a “something special” to your home, like a home bar, music room, home gym, or smart home features, can make it more appealing to potential buyers or renters, as it adds a touch of character and charm that sets it apart from other homes in the market.
One should keep in mind that the price tag of a home renovation project can vary greatly depending on factors, including the design of the project, the quality of the materials used, the location of the home, the homeowner’s preferences, and the anticipated preferences of the future home buyer. It’s important to remember that simply spending more money on a remodeling project doesn’t necessarily guarantee a higher return on investment. Ultimately, the value of a home is largely determined by local market trends and the preferences of potential buyers in a given area.
To ensure that you maximize the value of your investment, it’s important to work with a reputable and experienced remodeling contractor that can guide you through the entire process. We at Everything Home, a Central Indiana design-build studio, have a proven track record of helping homeowners achieve their remodeling goals while staying within budget and maximizing cost recovery. Contact us today to schedule a consultation and get started on your next remodeling project.
