Home Equity
Our 10 most valuable home improvements are hammer ready
You can still recoup most, but certainly not all, of the money you spend making a home bigger or nicer.
Not a single project on Interest.com's new ranking of the 10 most valuable home improvements will boost a property's resale price by as much as it costs.
One improvement — a midrange steel entry door — increased home values by 102% last year.
But that’s dropped to 73% in our new rankings.
Indeed, the average return on all home improvements has now fallen for six straight years.
Every dollar spent raises property values by only 58 cents, down from 70 cents in 2007.
To determine which projects provide the best return, we consulted the annual cost-versus-value home improvement survey by Remodeling Magazine and the National Association of Realtors.
We used that data to create our own list, based strictly on the percentage of the cost recouped at resale.
We pulled out variations on the same themes, such as one kitchen remodeling project instead of minor, midrange and upscale kitchen renovations, which the annual survey breaks out in great detail. In those cases, we reported the version that produced the highest rate of return.
Here are our choices for 2011:
Improvement 1. Upscale siding replacement costs $13,461 and adds $10,493 to your home's value, recouping 78% of the cost.
Improvement 2. Replacing the entry door with a midrange steel door costs $1,238 and adds $903 to your home's value, recouping 73% of the cost.
Improvement 3. Renovating an attic into a bedroom costs $50,148 and adds $36,346 in value, recouping 72.5% of the cost.
Improvement 4. Minor kitchen remodeling costs $19,588 and adds $14,120 in value, recouping 72.1% of the cost.
Improvement 5. Replacing your garage door costs $1,512 and adds $1,087 to your home's value, recouping 71.9% of the cost.
Improvement 6. Adding a wooden deck costs $10,350 and adds $7,259 in value, recouping 70.1% of the cost.
Improvement 7. Replacing windows with upscale vinyl windows costs $14,328 and adds $9,898 in value, recouping 69.1% of the cost.
Improvement 8. Finishing a basement costs $63,378 and adds $42,338 in value, recouping 66.8% of the cost.
Improvement 9. Adding a second story costs $165,796 and adds $103,391 in value, recouping 62.4% of the cost.
Improvement 10. Midrange bathroom remodeling costs $16,552 and adds $10,293 in value, recouping 62.2% of the cost.
Midrange remodeling adds new vanities and countertops, mirrors, medicine chest and maybe pulling the toilet and doing a new tub surround.
A midrange addition involves building a new bathroom with moderately priced fixtures, such as $165 for a solid-surface countertop with built-in sink as opposed to $500 for a custom-ordered sink that you would expect in a luxury addition.
Prices may seem higher than you expected for several reasons:
Averaging can skew costs higher than taking the median of all costs.
If, for example, three people remodeled their kitchens at a cost of $10,000, $15,000 and $100,000, the median price would be $15,000, because half of the projects cost more and half cost less. But the average price would be $41,666.
Prices include professional labor, which is about 30% of the cost. There also are substantial regional variations in home values, materials and labor costs.
Deciding which project to do and how much to spend really depends on your situation.
If the goal is to increase property value, your project should reflect the neighborhood. A six-figure kitchen renovation isn’t logical unless you live in a neighborhood of million-dollar houses. You’ll want to scale things down.
On the other hand, if your neighborhood is mostly three-bedroom, two-bath houses and your house has only one bathroom, you’re at a serious disadvantage on the resale market. Adding on a bathroom might make a big difference.
You also have to consider all of the costs involved with a renovation. A swimming pool is the perfect example, since building the pool is just the beginning of the expense.
The same is true of adding on a family room or remodeling a basement or an attic. You have structural costs plus the expense of furnishing, heating and cooling those spaces. Add those costs into your budget.
Finally, some decisions are made with the heart as much as the head.
Maybe you've always wanted a gourmet kitchen, a tri-level deck or a master suite.
You have every intention of living in this house for the rest of your life, and you don't really care if you recoup the money you spend on renovations.
Then knock yourself out. It's your money and your house, and you should have it exactly as you'd like.
If you're looking to finance your project with a home equity line of credit or home equity loan, our database of the best home equity rates from scores of lenders is a great place to start.
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