By Jaime Silveira
Malik Real Estate Group
With spring here, the days are getting longer and warmer, and we are renewed with possibilities. Homeowners have been dreaming and planning new projects for their homes all winter long. They’ve worked hard to save up for these dream projects, and now they’re anxious to get started. But amidst this excitement comes the inevitable question, is that project worth it? Should I spend the money inside or outside the home? Which project should come first?
As a real estate agent, I understandably get asked this question frequently. What projects are worth investing in? What type of return will I see if I invest in my home? I always try to guide my clients to choose what is best for them given their circumstances. They will be the one living in the home, so they should customize it to their liking. But, keeping an eye on the equity those projects will create for your home is a smart move.
In fact, the National Association of Realtors® (NAR) has done some extensive research on everything from the cost recovery of interior remodeling projects as well as outdoor remodeling projects to what they term the “Joy Score” for those same improvements. As simple as it sounds, the Joy Score is based on the happiness homeowners reported with their renovations. The NAR’s research group findings were published in reports titled “2022 Remodeling Impact Report” and “2023 Remodeling Impact Report: Outdoor Features.”
Cost recovery should be a question on every homeowner’s mind when contemplating home improvement projects. This is especially important to consider if you are planning on selling your home sometime in the future. As a homeowner, we want to make sure that the improvements we make to our home are helping our home to appreciate in value.
What projects “should” a homeowner consider when balancing cost, personal satisfaction, and adding value to their property? I’m glad you asked! Kitchens and bathrooms are considered big ticket or flashy items and likely the first improvement you’d think of. Remodeling a kitchen or bathroom is generally the most expensive investment you can make to your home. Thankfully, they are also the ones that give you the highest Return on Investment (ROI). ROI is the measurement of how much money, or profit, you have earned on an investment as a percentage of its total cost. It measures the profit you have made (or could make if you were to sell) on an investment. Home buyers tend to pay more for a home with remodeled kitchen and bathrooms because they look and function better than dated ones. Plus, many buyers don’t want to tackle these projects themselves. It stands to reason that 26 percent of Realtors® would recommend a bathroom remodel before selling. Thirty percent would recommend a kitchen upgrade. Not only does a newly remodeled kitchen or bathroom look amazing, but it attracts more buyers. Can we say bidding war?
According to the NAR, the cost recovery for refinishing hardwood flooring is 147 percent, new wood flooring 118 percent, and insulation upgrade is 100 percent, rounding out the top three. Looking at the Joy Score top three, painting the entire interior home, painting one interior room, or adding a new home office you will garner a score of 10. Not surprisingly, 48 percent of Realtors® do recommend painting the entire interior of the home. Talk about positive return!
I encourage you to balance the many factors that come into play when determining your next home improvement project. Most of all, enjoy the process and your space. It is important to remember that you can never truly measure your cost recovery until you sell your home. So, until then, have fun customizing your home to your tastes but always be aware of your investments and what type of value they bring to your home.
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