Visualizing the Best Home Remodeling Cost Recovery in 2019

There may be a number of reasons why you decide to remodel your home. You could finally be tackling the project you wanted to do since you moved or simply doing a remodel to get a higher value for your home when you resell. Either way, you want to recover as much of your costs as possible.

We’ve talked about the ROI (return on investment) before in terms of the average recouped value in home remodeling projects. Many homeowners pursue remodeling projects geared towards more luxurious and upscale finishes, but they are unable to recover much of what they spend. This is because often times the amount you are able to recoup depends on what homebuyers are willing to spend more to get. In other words, focusing on the projects that make your home more competitive on the market can tend to get you more return.

To help you better understand the kind of return you can get on remodeling projects, we look at ROI on the projects that homebuyers are looking for in the market today.

In the graphic above, we broke down the National Association of Realtors’ recent 2019 Remodeling Impact Report. This graphic has been color-coded to easily see which projects appeal most to homebuyers and which projects realize the largest percentage of recovered costs.

Remodeling Projects Homebuyers Care About

Interestingly, the remodeling projects that recover the most value are mostly projects that deal with hardwood floors, energy efficiency, or roofing. Hardwood floors, whether they are new or simply refinished, recover all, if not more, of the project’s value. These cosmetic interior projects not only appeal to homebuyers, but homeowners also tend to enjoy them. This is not too surprising. Over the past decade, there has been a growing trend of homeowners incorporating real hardwood floors into their interior design.

Energy efficiency is another remodeling project that appeals to homebuyers. When energy efficiency remodels are done, it is one less project they need to take on after purchasing the home. These remodeling projects are all about the functionality of your home. They aren’t going to make you fall in love with your home again. In fact, you may not even notice a difference (although your wallet might). According to the National Association of Realtors, energy efficiency projects such as HVAC replacement and insulation upgrades offer the most bang for your buck, but come in absolute last for bringing homeowner happiness. If you’re looking for a remodeling project that will increase the value of your home, then these energy efficiency remodeling projects should be seriously considered.

If you’re solely focused on a project that will increase the value of your home for resale, look into replacing your roof. This is especially important if your roof is nearly 30 years old (the average age for most roofs). As we can see from the graphic above, a new roof actually recovers 107% of its costs. In other words, by taking the pain of installing a new roof on your home you can actually gain more than you put into the project when you resell your home. So while it is certainly not the most fun project and is one of the lowest remodeling projects in terms of increasing a homeowner’s enjoyment of their home or their desire to be at home, it is often the most valuable one to undertake.

Major Renovations Have Limited Returns

When you think about a renovation project or a remodel, some of the most common ones considered are a kitchen or bath remodel, converting an attic or basement, or adding a new master suite or bathroom. Homeowners are often eager to pursue these remodeling projects as they bring the most joy and happiness, helping them enjoy their own homes more. However, reports from both Remodeling Magazine and the National Association of Realtors have shown that these major renovations have low rates of return.

These major renovations such as a new master suite or kitchen remodel are some of the most expensive. In fact, putting in a new master suite can cost nearly $150,000, a complete kitchen renovation cost $68,000. Yet these projects only recoup 50% and 59% of their costs respectively. This means that while these projects increase homeowner happiness, homebuyers are unwilling to increase their offers enough to recoup the additional costs of these major renovations.

Consider Your Reasons for a Remodel

Before you jump headfirst into a remodel project, you may want to step back and consider your reasons for a remodel in the first place. Knowing that each different remodeling project will have a different return can influence just how much you are willing to put into a project. The challenging part of selecting a remodeling project to increase the overall value of your home is that every market values remodeling projects differently. This means that in some markets you may be able to recover more of your kitchen remodel costs than the average 50%, whereas in other markets you may recover even less.

One way to consider which remodeling projects are best for you is to look at other homes in your area within your target selling price. If these homes have remodeled kitchens, then it may be worthwhile to pursue a kitchen remodel. However, if your kitchen is already on par with what is on the market, you may want to pursue a different remodeling project to increase your home’s value. A realtor should also be able to help you evaluate your home and determine what remodeling projects could help you resell for a higher value.

Ultimately, deciding which remodeling project you should pursue comes down to why you are remodeling. If you are moving in the next year or two, it makes sense to pursue projects that will increase the overall value of your home. However, if you don’t have plans to move within the next five to ten years, you may be able to pursue a project that helps you improve the functionality of your home with less concern for market resale value.

In short, always consider your return on your remodel before taking the plunge to help you achieve your remodeling goals.


Yuka Kato

Industry Analyst