Renovating parts of a home have become the established way homeowners maintain a property’s value. Upgrades can enhance a home’s look, expand its function, boost people’s enjoyment of it, and increase its resale price.
Homeowners know they must renovate periodically to keep their home’s value up, says Avalon Management in Buckhead. But what they often don’t know is which upgrades offer the most value for money. Renovating a home costs a lot; so before they embark on a project, owners often ask which renovations improve a home’s value the most.
For over a decade, kitchen and bathroom renovations have consistently ranked as the top home renovations, in terms of ROI. There are two reasons for this. First, kitchen and bathroom remodels play a prominent role in buyers’ decision to buy or to not buy a property. They also influence how much buyers are willing to pay for a home.
Second, kitchen and bathroom renovations deliver the most enjoyment for homeowners and is rated as the joy score. Whether homeowners are looking to sell a home or not, renovating its kitchens and bathrooms offers maximum value.
How much do kitchen and bathroom renovations improve a home’s value?
Generally, kitchen renovations will raise a home’s value more than bathroom renovations will. The average kitchen renovation returns 69% of the owner’s initial cost, compared to 57.2% for bathroom renovations. On the flip side though, kitchen renovations tend to cost about twice as much as bathroom renovations.
The rate of return for each renovation project also varies based on the specific kitchen or bathroom features that owners change, the scale of the renovation, and the floor size of the kitchen or bathroom. Below is an explanation of how kitchen and bathroom upgrades individually affect a home’s value.
How kitchen renovations affect the value of your home
Most kitchen renovations will return between 60% and 80% of what homeowners spend on the project. The kitchen projects that deliver the most value are usually those that are well-designed and professionally executed. DIY approaches don’t work well when remodeling a kitchen.
If the project is masterfully done, kitchen upgrades rank as the top interior remodeling project for increasing a home’s value. As a rule, the most effective kitchen renovations will achieve the following goals:
- Improve the overall style and design of the kitchen
- Enhance functionality by allowing users to do more inside the kitchen
- Replace or repair areas of the kitchen that are worn, faded, and damaged
- Create additional floor space or simply create the illusion of added space, while also improving ventilation in the kitchen
The value of a home will not necessarily increase in step with how much a kitchen remodel costs. Expensive renovations do not automatically guarantee the most returns. As a matter of fact, minor to mid-range renovations often surpass major renovations in their rate of returns.
A minor upgrade includes things like repainting walls, re-facing or replacing cabinet doors and drawer fronts, and deep-cleaning the floor. It may also include changing the kitchen’s countertop and appliances. But it does not involve removing or rerouting plumbing and improving flooring.
Renovations that involve altering the plumbing and flooring are considered major renovations. And though owners who do major renovations are less likely to recover a substantial part of their costs, they stand to derive a major benefit. Major renovations will help a home sell faster.
How bathroom renovations affect the value of your home
When they sell their homes, owners can expect to recover 60% to 70% of what they spend on bathroom renovations. But even if owners are not looking to sell, an upgraded bathroom delivers maximum satisfaction.
Bathroom remodels have a joy score of 9.6 out of 10. And these figures apply for both midrange and upscale bathroom renovations. The best bathroom renovations are those that cover some or all of the following:
- Repair and repaint surfaces that have been damaged by water
- Install cost-saving features that cut down on water usage and electricity bills
- Replace worn and outdated plumbing fixtures with more modern styles
- Update the vanity and surrounding areas: faucets, cabinets, and sinks
- Install a walk-in shower and rainfall showerhead, with a glass enclosure
- Overhaul the style of the flooring completely or simply install heated floors
On average, both midrange and upscale bathroom renovations will repay a significant part of the owner’s costs. But midrange renovations tend to pay more.
If they spend a little over $20,000 to remodel their bathrooms, owners can expect to recover around 67.2% of their costs when they resell. But for bathroom renovations of up to $65,000, they can expect to recoup around 60.2% of their costs. Midrange upgrades will perform marginally better than upscale upgrades. But in terms of their joy score, upscale upgrades perform a lot better. This becomes apparent when a home is being sold, because upscale upgrades help a home sell quicker.