Where Can You Reap the Biggest Gains from Home Improvement Projects?

Make sure you know what kind of return you'll get on your home remodeling investment

Where Can You Reap the Biggest Gains from Home Improvement Projects?
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March 14, 2017

If you are considering home improvements, it is a good idea to understand what type of financial return you will have from an upgrade in terms of the resale value of your home.

We've compiled some information on home improvement investments that usually offer the best returns. The figures we report are averages.

Not all home improvements are created equal. Some projects net a much higher return than others. The chart below highlights where some improvements may fall. Please note that these figures are only estimates; the real cost and return of your project depend on a number of variables.

Return value depends heavily on the real estate market and prevailing property values. If the market is slow, expect to see less return than you would in a fast market. Also, consider the neighborhood. If you remodel your house to twice the size of the other homes on the block, it is highly unlikely that you will be able to sell at double the price.

Important Points

  • Kitchen and bathroom remodeling projects consistently return the most in resale value and almost always help to sell a house. Converting a basement into a family room generally yields the smallest return on the investment.
  • Projects can be large or small. Sometimes, the cumulative effect of small projects can pay back more in resale value than that of larger projects. Small projects tend to be cosmetic in nature: fresh paint, new doors, garden windows, and ceiling fans. Large improvements involve adding or upgrading living space.
  • Today's fad may be tomorrow's standard. Backyard decks, for example, were difficult to find 30 years ago; now they are common. Decks may not have paid back very much in resale value decades ago, but as decks have become more desirable, their resale value has increased.
  • The price of home improvements fluctuates depending on economic conditions and region. If remodeling costs are particularly high in your area (or home sale prices particularly low), you may not recoup as much on your investment as you would if costs were in sync with sales prices.
  • As a homeowner, you will want to make whatever changes are necessary to enhance the enjoyment of the home for you and your family. However, you should be aware that the cost of the improvement will often not be totally recaptured in an appraisal or sale of your home.
  • Typically, neutral decorating (new carpet, paint, wallpaper, etc.) is money well spent. Larger improvements, such as additions and four-season porches, must be considered on a case-by-case basis. Be sure to take a look at your neighborhood when planning changes and try to keep improvements in line with other properties in the area.
  • Also, if you happen to do home improvements yourself instead of hiring labor, you can generally make more of a return. Be sure to follow proper building codes and acquire the proper permits. Never begin work if you are unsure how to proceed.
Project Average Cost Return Percentage
New heating or A/C system $2,000 to $4,900 60 to 100 percent
Tankless hot water heater $1,400 to $3,500 Eight to 40 percent
Minor kitchen remodeling $2,000 to $8,500 94 to 102 percent
Major kitchen remodeling $9,000 to $25,000 Up to 90 percent
Add bathroom $5,000 to $13,000 Up to 92 percent
Add a family room $30,000 Up to 86 percent
Remodel bathroom $8,500 Up to 77 percent
Add a fireplace $1,500 to $3,000 Up to 75 percent
Build a deck $6,000 Up to 73 percent
Remodel home office $8,000 Up to 69 percent
Replace windows $6,000 68 to 74 percent
Build a pool $10,000 and up Up to 44 percent
Landscaping $1,500 to $15,000 30 to 60 percent
Finish basement $3,000 to $7,000 Up to 15 percent