Use The Renovation Bible To Determine ROI Before You Swing That Hammer
Every year we gear up to do some much-needed (or long-desired) renovations to our home, and every year we wait for the Cost vs Value Report to come out and tell us whether we're going to see a decent return on those renos or whether they're a waste of time - and money.
The Cost vs Value report is a renovation bible of sorts in that it provides a guide for those of us who want to make sure we get some ROI with our updated kitchen, attic bedroom, new deck, or addition. "This site compares average cost for 21 popular remodeling projects in 149 markets with the value those projects retain at resale in 100 U.S. markets," they said. That means that not only can you get an idea of what the smartest renovations are nationwide, but also in specific geographic areas.
In the 2018 report, "average return on investment (ROI) for home improvement projects dipped across the board, with ‘upscale' projects taking the biggest hit," said RISMedia. Remodeling magazine's editor-in-chief Craig Webb suggests this may be a side effect of a strong housing market.
"It's not clear if this is a sign of nervousness among real estate pros in the face of a booming housing market or if nationwide affordability concerns are leading pros to question the value of renovations that would make a house even more expensive at resale - particularly with the new tax law regarding the deductibility of mortgage interest and state, local and property taxes," he said.
The highest returns in this year's report were focused on curb appeal projects. "In 2018, the three projects with the highest year-over-year increase in value are ‘curb appeal' projects—work that can be seen from the street," said Hanley Wood, publisher of Remodeling magazine. "These are for garage door replacement (up 18.6%), wood deck additions (up 17.7%) and manufactured stone veneer installation (up 15.7%). In keeping with this trend, the projects showing the highest YoY decline in value were interior projects: master suite additions (down 14.7%) and major kitchen remodels (down 10.9%)." Steel entry door replacements also continue to show among the most robust ROI, at 91.3%.
"The report continues to reveal tremendous regional variations in recouped value, with the highest returns on the Pacific Coast where the average payback is close to 64 cents on the dollar," said Builder magazine. "Markets in the Middle Atlantic region averaged a return of just over 51 cents. The cost differences are even greater when you compare individual markets. There was a 73.1% difference between the highest- and lowest-cost market for the Universal Design Bathroom project, a wider gap than any other job. The smallest difference was 28.5%, for a vinyl window replacement. Depending on the project, the most expensive of the 149 markets to get remodeling work done for particular projects are the New York City region, San Francisco, Los Angeles, and - perhaps surprisingly - Trenton, N.J."
Kitchen and baths
Renovation projects in these key areas showed better returns than additions, and mid-range projects rank higher than extensive overhauls. The highest-ranking kitchen project was a minor kitchen remodel, at an 81.1% return; while a major kitchen remodel had only a 59% ROI. The previously mentioned Universal Design bathroom renovation had a 70.6% ROI, but opt to add a bathroom instead, and you can expect only a 59% return.
You can see more national info and also break down potential renovation projects in your geographic area here.