Does remodeling a kitchen or bathroom pay off well when you sell your home? You might be surprised by the top-rated upgrades.
Insulation is about as sexy as flannel pajamas, but guess what: The money spent on beefing up attic insulation delivers the best bang per buck invested in home upgrades, says Remodeling Magazine’s 2016 Cost vs. Value report.
Yup. Insulation and nine other practical projects outscored more glamorous jobs like kitchen and bathroom remodels.
To conduct the report, now in its 29th year, the magazine researched costs in 100 real estate markets around the country for 30 popular home projects. It asked a panel of real estate professionals to evaluate the rate of return on each of these projects in their local area.
One caveat: Earning a decent return isn’t the same as making a profit. On average, money spent on the 30 projects earned a measly 64 percent return. In most cities, the best jobs only came close to breaking even. The one exception this year was beefing up attic insulation, which had a good return on investment in most markets — with an average of 116 percent.
Also worth noting: Projects recoup their cost better in high-demand real estate markets like San Francisco than in less-competitive markets.
These are the 10 projects that earn the biggest payback for homeowners in the study:
1. Attic insulation: 116.9 percent
Photo (cc) by Ray Dehler
Of the 30 jobs that Remodeling Magazine examined, the simple task of blowing loose fiberglass insulation into a 35-by-30-foot attic pays back the best. On average, around the country, insulating the attic to an R-30 value cost $1,268. It added $1,482, on average, to the home’s value — a 116.9 percent rate of return. The attic insulation job makes money for homeowners in 59 of the 100 markets studied.
How much insulation you’d need at your home depends on your climate and the building energy code where you live. (This U.S. Department of Energy map shows residential and commercial energy codes used in each state.)
2. Manufactured stone veneer: 92.9 percent
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Adding manufactured stone to a home’s exterior adds a look that buyers like and are willing to pay more for. The project considered in the study involved removing 300 square feet of vinyl siding around the bottom of a home and replacing it with manufactured stone veneer at a cost of $7,519, on average. The “stone” is made of molded concrete that’s shaped and treated to resemble natural rock. The estimated payback: $6,988 added to the home’s value.
3. Garage door replacement: 91.5 percent
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An investment of $1,652, on average, produces a return of $1,512 for homeowners who spiff up their garage with a new, uninsulated four-section steel door that reuses the existing motorized opener and adds new galvanized steel tracks. Spend a bit more, and you can get almost as good a return. A more-expensive garage door replacement cost $3,140, on average, and recouped $2,830 — a 90.1 percent return.
4. Steel entry door: 91.1 percent
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Replacing a home’s front door with a fresh one of 20-gauge steel has been a reliable winner in Remodeling Magazine studies over the years. An investment of $1,335, on average, produces a return of $1,217. For the price you get a door that is painted at the factory on both sides and includes a dual-pane window and a new bored-lock in brass or antique-brass.
5. Minor kitchen remodel: 83.1 percent
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Spending $20,122 to update a 200-square-foot kitchen with new cabinet and drawer fronts and hardware, new wall oven, cooktop, sink, faucet and laminate countertops yields adds $16,716, on average, to a home’s value.
But take the project upscale for an upscale major kitchen remodel and the payback changes. Spend $119,909 on a “major” kitchen remodel — including top-of-the-line cherry cabinets, stone counters, cork floors, new lighting, ceramic or glass backsplash, built-in wall oven, cooktop, refrigerator, warming oven, trash compactor, commercial range and vent hood — and you’ll recoup just 61.5 percent of the investment, the study finds. A major kitchen remodel done with midrange products pays off better: 64.9 percent.
6. Fiberglass entry door: 82.3 percent
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Invest an average of $3,126 in a new entry door made of fiberglass in a simulated wood grain, stained front and back with a decorative window. The price includes PVC-clad trim and a new mortise lock with lever handle and integrated deadbolt with an oil-rubbed bronze or satin-nickel finish. The payback: $2,574, on average.
7. Siding replacement: 77 percent
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Upgrading a home’s siding is an expensive project — the study envisions spending an average of $14,100. But it improves a home’s value by $10,857, on average. This price tag, however, averages in not only a different costs across 100 markets but also a great variety of siding products, from vinyl and foam-backed vinyl, to fiber cement and engineered siding. That means your costs and your results could vary widely.
8. Wood deck: 75 percent
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The project envisioned includes a 16-by-20-foot deck of pressure-treated wood planks and joists, three steps and a built-in bench and planter and railings — all of the same material. The cost: $10,471. The return: $7,850.
Composite decking is the newer alternative. The best composite products are low-maintenance and offer long life. But a nearly identical project done with composite planking costs $37,943, on average — almost four times the price of wood — and it recoups just 57.7 percent of the cost ($21,877) when the home sells.
9. New vinyl windows: 72.1 to 73.3 percent
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Vinyl windows beat wood windows when it comes to recouping cost. But not by much:
The cost of replacing 10 windows (leaving the trim in place) runs $14,725, on average. Envisioned for the project are 3-by-5-foot double-hung insulated, low-E vinyl windows with a simulated wood finish on the inside. You’d recoup $10,794 (73.3 percent), on average, if the home sold within a year.
Wood windows are costlier: The same project costs $18,087 on average. But you’d recoup about $13,050, or 72.1 percent.
10. New roof: 71.7 percent
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There’s nothing cheap about replacing a roof. But maybe that’s why buyers pay a premium for a home with a new roof. At least they know the project is out of the way for a good long while.
The average cost for a new roof was $20,142. Envisioned are a roof of 30 new squares of 235-pound fiberglass asphalt shingles, including installation. Also included: removing the old roofing material, disposing of the waste and new felt underlayment, drip edge and flashing. Gutters are not included. This project is expected to recoup $14,446, on average, when the house sells. That’s a great deal on a new roof for a home buyer
What about the fun stuff?
You probably have the idea by now: Money spent on practical, no-frills upgrades pays back best. But if you’re still wondering about how well money spent on lifestyle-type projects pays back, here are a few examples:
- Basement remodel: 70.4 percent
- Two-story addition: 69.3 percent
- Family room addition: 67.9 percent
- Midrange bathroom remodel: 65.7 percent
- Master suite addition: 64.1 percent
- Upscale bathroom remodel: 57.5 percent
- Bathroom addition: 56.2 percent
What’s trending, and where
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If you’re thinking of sinking money into remodeling, here are some of the other takeaways from the study that may help you decide on the best project for you:
- Curb appeal: Many of the projects with the most return were improvements to a home’s exterior. That, the magazine’s editors speculate, may be because they improve what the real estate industry calls “curb appeal,” or the impression the home makes on buyers and passers-by. Work done on windows and siding, for example, paid off better than money invested in work on kitchens and bathrooms.
- Replacements: Replacement projects like doors, windows and siding — returned slightly more (61.5 percent) than remodeling projects (57.3 percent).
- Project on the upswing: The project with the greatest financial gain in the last year was a minor kitchen remodel, which delivered 83.1 percent this year vs. 79.3 percent in 2015.
- Where remodeling pays: The projects studied delivered different returns in different markets. In just one city, San Francisco, every one of the jobs returned more 100 percent of the investment. Housing shortages seem to drive up return, the magazine says. In 18 cities where the renovations performed best (at least 75 percent of the money invested) return, half were in California or Florida.
- Payback varies by region: Payback was highest — 77.5 percent — in the Pacific region, which includes high-priced real estate in California and Hawaii as well as Oregon, Washington and Alaska. Payback was lowest — 54.9 percent — in the East South Central region, including Alabama, Kentucky, Mississippi, and Tennessee.
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