If you’re planning to invest time and money into your home this spring with a few improvements and upgrades, it’s important to consider what the return on that investment will be if and when it comes time to sell.
Since 2002, REMODELING - a trade magazine for contractors and builders - has been tracking how much it costs to do common home improvement projects and calculating how much of that cost is recovered when the home sells.
After tracking this data for more than a decade, it’s clear that although kitchens and bathrooms always steal the spotlight in a home remodel, they aren’t necessarily the ones that have the highest return on investment when you sell your home.
When the results of the magazine’s annual Cost vs Value Report are released, HOUSELOGIC – which is part of the National Association of Realtors - is quick to report the projects with the highest return on investment.
However, for 2014 the group took a historical perspective and released the following report on how projects have performed since 2002.
The biggest jump is for backup generators, which had some of the lowest ROI rates over the years - as low as 47.5 percent in 2011 - soared to 52.7 percent in 2012 and then took an another 15 point jump to 67.5 percent in 2013.
You can thank the weather for that one.
While the following list of projects didn’t have similar highs and lows, they are the ones with the most consistent ROI for more than a decade. These “long-term winners” share four characteristics – low-maintenance, good (but not necessarily the highest) quality, energy efficient and not too costly.
Here’s a general look at how remodeling investments fare over time based on the analysis by HOUSELOGIC:
1. The Highest ROI: Replacing Your Front Door
Year in and year out, no single project has provided such a healthy return on your home improvement dollar as a new front door. A replacement steel door averaged a 97.2 percent return on investment — by far the highest return in our historical look at the Cost vs Value Report. It’s also the lowest-cost project in the annual report at $1,162. It’s an energy upgrade that has great curb appeal and needs virtually no maintenance.
2. New Siding
No other feature has as much impact on curb appeal as siding. Clean, well-cared-for siding signals home improvement mastery. Old, worn siding can contribute to a loss of up to 10 percent of your home’s value. That’s one reason new siding has such a high ROI. In fact, of the top 10 long-term averages from the Cost vs Value Report, three of them are replacement siding projects:
• Vinyl siding is low-cost, durable and easy to install, hitting all the right notes when it comes to getting a good return on your home improvement dollar. Over time, vinyl siding replacement projects have returned 81.6 percent on the initial investment.
• Fiber-cement siding also shows a strong ROI, with the second-best return of any project in the long-term look at the Cost vs Value Report — 83.8 percent. Although it’s more expensive than vinyl, it does have one thing vinyl still lacks — the perception of quality.
• Foam-backed vinyl is another winning project, with an average long-term return of just under 80 percent and a cost that’s slightly higher than fiber-cement since it’s an energy-efficient upgrade, with an R-value of R-2 to R-3 that delivers estimated energy savings of 5.5 percent over a measured two-year period.
3. Minor Kitchen Remodel
Pinterest-inspired remodels took a big hit on ROI during the recent recession, but a minor kitchen remodel with a relatively modest financial commitment weathered the economic bumps with an average return of 82.3 percent over the years. The 2014 Cost vs Value Report estimates the cost at $18,856 for labor, new cabinet doors and drawer fronts, countertops, flooring and appliances.
4. Wood Deck Addition
Deck additions have been popular projects with a high ROI but, like a lot of investments, decks fell off during the recession. Even so, the outdoor living trend kept them on the list of long-term winners with an average ROI of 80.6 percent. Another reason may be the fact decks and patios expand living space at a low cost of $8 to $30 per sq-ft, which is a bargain when compared to an addition at $150 to $300 per sq-ft.
5. Attic Bedroom Remodel
Attic bedroom remodels round out the list of smart investments with an overall ROI of 79.4 percent. Attic conversions were especially popular during the recession, when homeowners put off buying move-up houses and instead turned to increasing the living space they already owned. Makes sense with the rise of multi-generational households over the past few years.