We all know that making improvements to your home can increase its value. The idea is that more utility equals more money’s worth. But what is the true measurement of value on your home renovations?
While the financial return on your home improvements might be the most apparent benefit, it’s not the only one.
People remodel and redesign for any number of reasons. Some of these reasons include upgrading the décor, replacing worn-out finishes and fixtures, increasing efficiency and livability, or just making a long-overdue change.
It’s an investment of time and money that can pay off in several different ways.
Home Improvement ROI
One study by the National Association of Realtors Research Group focused on the impact of home renovations. It gauged the return on investment (ROI), both in terms of monetary value and also homeowner satisfaction.
This research led to the development of a model called the “Joy Score.” Essentially, this is a metric that measures a homeowner’s desire to be in the home, their enjoyment of it, their happiness, sense of accomplishment, and satisfaction with the renovation. Collectively, these factors add up to the Joy Score.
In the study, levels went up across the board after the renovation, and the overall score increased significantly. Simply put, the study showed that people were happier with their homes after a renovation, both with the functionality and physical aesthetic of the result.
However, when it comes to assessing the real payoff of a renovation, it’s important to think about more than just how it looks. After all, beauty is only skin deep.
The Long-Range Payoff of Your Remodel
If you pour a lot of time and money into a renovation, you want to be able to recoup the expenses. The ultimate value, however, is about more than just money.
Cost recovery is highly dependent on the design of the project, the quality of materials, location, age, and condition of the home, and the needs of the homeowner. A professional contractor, rather than a casual laborer or DIYer, is better able to help you design and choose materials that will bring a higher rate of return.
As it turns out, two remodeling projects that resulted in the highest Joy Scores in the Realtor’s Research Group study were total and partial kitchen remodels. But how else, aside from the Joy Score, can we measure success?
Hedging Your Bets: What Does The Potential Buyer Want?
One way to gauge the resale value of your remodel would be to consider the appeal of your new features to potential homebuyers.
If complete kitchen overhauls and kitchen upgrades top the list of most desirable projects, it would be reasonable to assume that they would provide the highest resale value. Master suites are another attractive feature to buyers, so they are well worth the investment.
Bathroom renovations and additions fall about a third of the way down the NAR’s list of the highest return on both ROI and satisfaction. Bathrooms need remodeling to deal with the usual wear and tear that occurs over time, but work is typically prioritized for functionality over beauty and luxury. With a Joy Score of 9.3 and a 57 percent anticipated rate of cost recovery, bathroom renovations are nothing to sniff at.
Across the board for both realtors and homebuyers, though, it seems that the most desirable projects are also the ones that offer the best ROI. That brings us back to the kitchen, and it’s not hard to see why. We spend so much time in the kitchen, whether we’re entertaining, catching up with friends, spending time with the family, or just enjoying a quiet moment to ourselves.
Because of its appeal, a kitchen upgrade is a project that realtors often recommend to homeowners before they sell as it can help to seal the deal for potential buyers.
Last but not least, by a longshot, the full-scale kitchen remodel manages to top everything. Although a full remodel is not necessary to sell a house—often a lesser upgrade will do the trick—it is still a desirable option for anybody who wants to upgrade their kitchen to fit their lifestyle. A full kitchen reno has a rating of 10 on the Joy Scale and an estimated cost recovery of 59 percent.
Maintaining or raising your home’s value should always be top-of-mind, both now and in the future. When you’re ready to get started, reach out to schedule a conversation, and let’s talk about how we can enhance your home’s potential.