(The following article is courtesy of Guaranteed Rate Affinity)

There are many reasons to renovate a home, from wanting new, exciting features and upgrades to correcting oversights or repairing what has degraded over time.

Pairing wants and needs with the drive to increase the resale value creates the perfect recipe for home renovations. However, renovations can be tricky business when it comes to separating wants from needs. To help, there is an additional tool that can add perspective on how much a renovation might add to the overall value of your home: ROI or return on investment.

Using ROI can help can examine the numbers with a critical eye to finalize and prioritize renovation goals. Often, a look at the numbers can help determine whether a particular renovation is critical or if it can wait in favor of other home-improvement projects.

Here is a list of some of the most sought-after renovations in the current market, along with ROI percentages and comments on how those numbers have changed from 2023.

When it comes time for you to dive into your renovation to-do list, we’re here to help you find the solution that makes sense for you, your family, and your unique circumstances. So, if you are ready to get going on home renovations of practically any scope from the minor to the extensive, we recommend speaking to one of our loan officers. We have many different types of renovation products and options to help you bring the best version of your home from your imagination to reality. With that in mind, let’s dive in.

Worth vs. value

It’s no secret that home renovations can be expensive and invasive. The latter is especially the case when working from home. Depending on the intensity and complexity of the renovations in question, temporarily relocating might be a good choice while work is underway. Likewise, it may take some time after the renovations are over to return a sense of normalcy.

With that in mind, here are two things to ponder before embarking on a journey of renewal. For each renovation, consider the following:

• The total cost of the renovation vs. the quality of life it will add
• The renovation’s worth in terms of the value it will add to the home

Ultimately, whether a particular renovation is worth the cost and interruption is highly subjective. There’s nothing wrong with making a renovation simply because you want it or because it brings you joy. This ROI list can provide a framework for an at-a-glance view into how much popular renovations can add, on average, to the value of a home.

ROI numbers

Return on investment for home renovations is measured by how much of the cost of a particular renovation is recouped once the house is sold relative to how much it costs overall. The ROI numbers presented here are national averages. These can vary from region to region depending on a number of factors, so bear that in mind as you read, and categorize them as estimations.

Remodeling magazine’s yearly Cost vs. Value report¹ provides a guide to relative ROI rates of some of the most popular renovations:

HVAC Conversion/Electrification: 

• Cost: $18,800
• Value added: $12,422
• ROI: 66.1%

First on this list was quite popular last year with a 103.5% ROI. That number fell to 66.1% in 2024, however. While there are any number of factors that could affect why converting a home’s HVAC system from fossil fuels to purely electricity could have fallen off so much in a year, this does prove one of the biggest downward changes from 2023.

Something to note, however, is that such a renovation’s ROI is never more relevant than in the year that the house is sold. Historically, this is one of the most reliable and sound renovations.

Garage Door Replacement: 

• Cost: $4,513
• Value added: $8,751
• ROI: 193.9%

In sharp contrast to the HVAC conversion, replacing your garage door has skyrocketed in value since last year. In 2023, this renovation already boasted an impressive rate of 102.7% value, meaning that the renovation effectively paid for itself and then some. Now in 2024, the ROI is an incredible 193.9%! Considering that this type of upgrade has the lowest costs on this list, it makes it an ideal starting place for homeowners beginning their suite of renovations.

Manufactured Stone Veneer:

• Cost: $11,287
• Value added: $17,291
• ROI: 153.2%

Another renovation that had over a 100% ROI last year, a manufactured stone veneer on the exterior of a home has continued to rise in popularity in a big way. From 102.3% in 2023, its ROI increased to 153.2%. Considering the relatively low price overall, this is another way that homeowners can dramatically spruce up the appearance of their home at first glance while increasing the property value. It also goes to show the enduring power of curb appeal to potential buyers.

Minor Kitchen Remodel – Midrange: 

• Cost: $27,492
• Value added: $26,406
• ROI: 96.1%

Major Kitchen Remodel – Midrange: 

• Cost: $79,982
• Value added: $39,587
• ROI: 49.5%

Major Kitchen Remodel – Upscale: 

• Cost: $158,530
• Value added: $60,176
• ROI: 38.0%

Still, the kitchen is likely the first thing a potential buyer might notice in a house without furniture, and the advantages of having a fully modernized and upgraded kitchen while you’re living in the house can seldom be overstated.

Siding Replacement 

Fiber cement:

• Cost: $20,619
• Value added: $18,230
• ROI: 88.4%

Vinyl: 

• Cost: $17,410
• Value added: $13,957
• ROI: 80.2%

Curb appeal is a tried-and-true approach to hook buyers before they even set foot in the house. The stone veneer is one way to increase that perceived value, but siding is another way to beautify and protect the exterior of the home. Not surprisingly, both types of siding have solid ROI numbers behind them this year. Fiber cement was largely unchanged, with only a 0.01% drop in ROI from last year.

Window Replacement 

Vinyl:

• Cost: $21,264
• Value added: $14,270
• ROI: 67.1%

Wood:

• Cost: $25,799
• Value added: $16,222
• ROI: 62.9%

Next is a category that is very close in both average price and ROI from a year ago. Both types of window replacement increased slightly in price. Where they differ, however, is that the ROI for vinyl window replacements dropped by 1.4% to settle in at 67.1%. On the other hand, wood window replacements increased by 1.7% to 62.9%. Not a severe change either way, though it is interesting to note how housing accessories do seem to be trending away from vinyl.

Deck Addition

Wood:

• Cost: $17,615
• Value added: $14,596
• ROI: 82.9%

Composite:

• Cost: $24,206
• Value added: $16,498
• ROI: 68.2%

Decks have long been an in-demand home feature across the country, particularly in the warmer months when summer get-togethers and cookouts are the norm. It seems that decks of both the wood and composite types have seen a jump in their ROI numbers. Though changing very little in price, their return-on-investment numbers have increased from 50.2% to 82.9% for wood and 39.8% to 68.2% for composite. While these numbers may not be as high as other renovation types, their sharp increase would seem to tell the tale that the demand for decking is on the rise.

Bath Remodel 

Midrange:

• Cost: $25,251
• Value added: $18,613
• ROI: 73.7%

Universal Design:

• Cost: $40,750
• Value added: $20,148
• ROI: 49.4%

Upscale:

• Cost: $78,840
• Value added: $35,591
• ROI: 45.1%

When it comes to remodeling a bathroom, there’s definite good news and bad news here. The good news is that — overall — all three scales of bathroom remodel have remained close to their price tags from last year while increasing in ROI. The downside is simply that the more upscale the renovations, the lower the ROI numbers become. This was the case in 2023 as well. The upscale bathroom remodel clocks in at the lowest of the three at 45.1%, though that number is up from 36.7% previously.

Primary Suite Addition 

Midrange: 

• Cost: $164,649
• Value added: $58,484
• ROI: 35.5%

Upscale: 

• Cost: $339,513
• Value added: $81,042
• ROI: 23.9%

Adding or overhauling the space of the primary suite of your home can definitely be an extra draw for would-be homebuyers. Whether that takes the form of adding a new bedroom, installing a gas-powered fireplace with its own chimney, rearranging the internal configuration of your home or all of the above, you’re adding features that could help your home sell quickly.

However, the high price tag of such a monumental undertaking may not favor a return on the kind of money it takes to make such a change. In both categories, the ROI percentage did increase, but we hasten to add that the ROI tends to be low relative to the cost. The upscale category, for example, has the lowest ROI of any on this list at just 23.9%, but also has the highest price of any entry here as well. So, if you plan to make such a change to your home, be prepared for it to only give back a third or quarter of what you put into it.

Final thoughts

The ROI may not be the end-all, be-all deciding factor and some renovations may be necessary. Regardless of why a project is undertaken, considering ROI may help make a more informed decision on how to proceed.

¹ © 2024 Hanley Wood Media Inc. Complete data from the Remodeling 2024 Cost vs. Value Report can be downloaded free at www.costvsvalue.com. 

 

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