Home renovation activity may have slowed somewhat compared to the pandemic-era frenzy, but homeowners are still investing in their spaces, especially as the housing market heats up in the spring.
And when it comes to return on investment, some projects are now offering the highest return values in history — with a few home upgrades averaging returns around 200% for the first time ever — according to the 2024 Cost vs. Value Report from Zonda Media, a research and analytics company. Housing market.
The report found that replacing garage doors had the highest average return at 194%, followed by upgrading to a steel front door, with a return on investment of 188% – both nearly double what it was last year.
Curb appeal is key
Forget a designer chef's kitchen, and the projects that offer the biggest returns in resale value are mostly related to curb appeal rather than flashier kitchen and bathroom remodels, Zonda reports.
In fact, the report found that nine of the top 10 projects with the highest return on investment were exterior improvement projects.
“When it comes to adding resale value to a home, exterior replacement projects still make a lot of sense,” Clay DeCorn, editor-in-chief of Zonda's JLC Group, said in a statement.
However, with the rising costs of construction labor and building materials, not everyone will get their money's worth in improving the value of a home.
Just three projects on Zonda's list can deliver a 100% return on investment, including replacing garage doors, upgrading to a steel front door, and installing stone veneer.
“Discretionary projects like a high-end bathroom or kitchen remodel will feel valuable to those making the selections but won't provide the same amount of return to sellers,” DeKorne said.
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A simple kitchen remodel – such as painting and updating the backsplash – has yielded high returns, with 96% of the costs recovered. But high-end kitchen and bathroom remodels were not, the Zonda survey found, with returns of 38% and 45%, respectively.
“Making expensive upgrades to the kitchen just won't pay off,” said Angelica Ferguson Vondrak, an associate real estate broker based in Rhinebeck, New York.
“Unsexy promotions are more important.”
With home prices rising and homes for sale in short supply, sellers need to be especially strategic in their efforts to attract buyers willing to pay the highest price in today's market, according to Todd Tomalak, director of building products research at Zonda.
Furthermore, financing renovations or improvements with a home equity loan or home equity line of credit has become more expensive along with the Federal Reserve's 11 series of interest rate hikes since 2022, including four in the past year.
“A new garage door or new entry door can make a definite difference,” Tomalak said. “This could be the thing that makes one home stand out from the others, making the home worth a higher price.”
Minimizing appeal is important in getting the right price from the right potential buyer.
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To get the best value for your money, talk to a Realtor in your area about specific renovations that might increase your home's value and those that should be skipped, Vondrak advises.
In some areas, a swimming pool can pay off three times as much, and in other locations, such a huge investment can fail, she added.
“The non-sexy improvements are more important,” Vondrak said, such as an HVAC conversion (replacing a fossil fuel-burning furnace or boiler with an electric heat pump) or a new roof or windows.
Often times, a thorough cleaning can go a long way, Vondrak said. “Definitely get rid of old furniture and replace it with new covers or add covers,” she said. “You want everything to feel fresh and new.”
