Home Equity
10 most valuable home improvements
' width='219' height='123' \>
It's true: Making your home bigger, or nicer, makes it more valuable. But this year, as in the past couple of years, you'll likely recoup much less than what an improvement cost.
Only one project -- installing a new front door -- boosts the value of your home by more than it costs. It's also the only project that adds more than 85% of the cost to your home's value.
The average return on home improvements has fallen for five straight years, slumping to 60% in 2010, down from 63.8% in 2009, 70% in 2007 and 67.3% in 2008.
That means every dollar spent improving a home now boosts its value by an average of only 60 cents.
To determine which projects provide the best return, we went straight to the mother lode of data: the annual cost-versus-value home improvement survey by Remodeling Magazine and the National Association of Realtors.
We used that data to create Interest.com's list of the 10 best home improvements, 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 gave you the version that produced the highest rate of return.
Our top 10 home improvement projects, with the national average for cost, resale value and the percentage of the cost that was recouped, are:
Improvement 1. Replacing the entry door with a midrange steel door costs $1,218 and adds $1,243 to your home's value, or 102.1% of the cost.
Improvement 2. Replacing your garage door costs $1,291 and adds $1,083 to your home's value, 83.9% of the cost.
Improvement 3. Upscale siding replacement costs $13,382 and adds $10,707 to your home's value, 80% of the cost.
Improvement 4. Adding a wooden deck costs $10,973 and adds $7,986 in value, 72.8% of the cost.
Improvement 5. Minor kitchen remodeling costs $21,695 and adds $15,790 in value, 72.8% of the cost.
Improvement 6. Replacing windows with upscale vinyl windows costs $14,284 and adds $10,368 in value, 72.6% of the cost.
Improvement 7. Renovating an attic into a bedroom costs $51,428 and adds $37,142 in value, 72.2% of the cost.
Improvement 8. Finishing a basement costs $64,519 and adds $45,186 in value, 70% of the cost.
Improvement 9. Adding a second story costs $165,243 and adds $107,338 in value, 65% of the cost.
Improvement 10. Midrange bathroom remodeling costs $16,634 and adds $10,668 in value, 64.1% 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.
If the prices seem higher than you expected, there are several reasons:
Averaging can skew costs higher than taking the mean of all costs. 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 would be $41,666.
Prices include professional labor, which is about 30% of the cost. There are also substantial regional variations in home values, materials and labor costs.
So, how do you decide which project to do and how far to go?
The maxim, "If a little is good, a lot must be better," does not always apply in the world of real estate.
If your goal is to increase the value of your home for resale, your project needs to reflect the neighborhood.
Sure, you can spend six figures on a kitchen renovation, but unless you live in a neighborhood of million-dollar houses, you'll want to scale things down.
The same goes with bedroom and bathroom counts. 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 the costs involved with a renovation. A swimming pool is the perfect example.
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 attic. Not only do you have the structural costs, you also will need to furnish those spaces and heat and cool them year-round. So 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, or a trilevel deck with a hot tub and an outdoor kitchen, or a master suite.
You have every intention of living in this house for the rest of your life, you know you'll never recoup the money you put into it and you don't care. If you can afford it, knock yourself out. It's your money and your house, and you should have it exactly as you'd like.
Go for it.
Follow Interest.com on Twitter.
Twitter
Delicious
Digg
Buzzup