The momentum in home remodeling is just another positive indicator that the housing sector is strongly recovering. “The strength of the Remodeling Market Index, especially in owner-occupied properties, shows that homeowners are investing in remodels as home prices stabilize,” says George Moore Jr., the National Association of Home Builders Remodelers chairman. “As owners become more confident that investments in housing will hold their value, they are beginning to undertake projects to improve their comfort that they had been putting off.”
The NAHB index showed improvements in all three of the indicators measured, including maintenance and repairs, minor additions and alterations, and major additions and alterations.
At a six year high, more and more people are deciding to take on home renovation. But not all home improvement projects are the best in terms of payback if you're looking to boost your home's value and sell. If you're on the verge of sinking money into remodeling your home, keep a few things in mind before you start tearing down and adding walls.
To start, basic maintenance and repair work such as exterior painting and replacing the roof are more important than having a really cool kitchen. Remodeling Magazine says that you're less likely to recoup your cost in a major kitchen or bathroom renovation than you are when it comes to basic home maintenance work such as adding new siding. Replacing roofs and windows also proved to be one of the highest return of investments at time of resale. Exterior home renovations that improve your home's curb appeal tend to have the highest return on investment.
When it comes to home improvement projects, your return on investment has to do with the value of your home, the value of the homes in the immediate neighborhood, the housing market, how soon you sell after making those improvements, and the quality of those improvements.
But the features that really appeal to home buyers is the use of strong, low-maintenance materials in replacement products. Buyers are frequently looking for what will reduce a home's operational and maintenance cost, Remodeling Magazine reports. What makes replacement projects so popular is that they not only cost less, but more homeowners see them as necessary maintenance rather than a splurge.
Top Remodeling Projects With the Highest Return of Investment
Using Remodeling's cost versus value report for mid-range projects for 2013 you'll notice that this list predominantly covers projects that will replace worn or aged home components without enlarging the home's footprint.
The cost value report changes drastically depending on the city data, and also includes a side by side comparison of national averages. For the top ten remodeling projects involved both interior and exterior jobs.
No. 1 Kitchen
The most cost effective project is a minor kitchen remodel, which comes in with a $17,849 job cost and an excellent 76.2% cost recoup.
No. 2 Deck or Patio
A wooden deck addition yields the second highest cost recoup of 75.8%. The job costs $8,996 to complete and adds a 16 by 20 foot deck that includes a built-in bench and planter, stairs, a complete railing system, railings, and balusters.
No. 3 Basement
A basement remodel is one of the more costly projects at $58,353 but with a cost recoup of 74.2%. A basement remodel increases living space, making it a great addition to a home.
No. 4 Attic
Adding an attic bedroom earned the fourth spot with a cost of $45,585 with a cost recoup of 72.3%. This mid-range job involves adding a 5 by 7 foot bathroom with shower, insulating and finishing the walls and ceiling, adding four windows, extending the heating and AC and also improving wiring and lighting. This is one of the most inexpensive ways to add both space and an additional bathroom into the home.
No. 5 Front Door
One great way to add curb appeal is to replace the front door. This inexpensive upgrade costs $1,110 with a 71.7% return using a mid-level 20-gauge steel door.
No. 6 Wood Casing Windows
Mid-range wooden window replacements earned the sixth spot with a job cost of $10,369 and a return of 71.0%. Wood replacement windows are more expensive than vinyl, but appeal to home buyers with their nice, sleek, clear-coated look. They're also great energy savers.
No. 7 Gourmet Kitchen
A mid-range major kitchen remodel costs $52,190 with a return of 70.1%. This project updates an outmoded 200 square foot kitchen with semi-custom wood cabinets, 3 by 5 foot island, and laminate counter tops with a standard stainless steel sink. Energy efficient kitchen appliances included with custom lighting, resilient flooring, and painted walls, trim, and ceiling.
No. 8 Garage
This garage door replacement project carries a cost of $1,445. You'll recoup 69.2% of this project, and though it's not one of the more desirable home improvement jobs, it adds better functionality and appeal.
No. 9 Windows
Vinyl window replacements earned the ninth spot with a cost of $9,454 and a cost recoup of 67.5%. The job involves replacing 10 existing 3-by-5 foot double-hung windows with insulated vinyl replacement windows.
No. 10 Siding
Siding replacement using foam-backed vinyl is a project with a cost of $10,685 and a 67.5% return of investment. This project replaces 1,250 square feet of existing siding and keeps the house warm with its energy efficient benefits.
The lowest return on investment home improvement project? A sun room addition, coming in at a cost of $69,626 with a recoup of 42.8%. On a national level, the lowest was a home office remodel at 43.6%.