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Cost vs. Value Report: Which Renovations Make Cents

Remodeling Magazine's Cost vs. Value Report is out, and it's good news for sellers. For the second year in a row, all 35 projects listed in the report recouped more money upon resale than the previous year. The boon is caused in part by rising existing-home sales and home prices. Between 2012 and 2013, existing-home sales rose 9.1 percent and home prices increased 11.5 percent. And as more homes are sold for more money, those sellers can expect to see greater returns on their investments.

First Impressions Count
For the second year in a row, a steel door entryway upgrade topped the list. This quick and affordable update to a home recouped 96.6 percent of its remodeling cost at resale. Buyers notice curb appeal first, and an upgraded front door makes a good first impression.

Stormy Weather
This past year's record storms - and the power outages they caused - are in home buyers' thoughts. As such, more and more homeowners are installing backup power generators. In past Cost vs. Value Reports, this renovation languished near the bottom of the list, but it now ranks 25 out of 35; install a backup power generator, and you'll recoup 67.5 percent of its cost.

Space to Roam
Square footage is high on the list of buyers' demands, but most are not willing to pay a premium for the extra space. Major home additions will recoup some of their initial costs, but the renovations that pay off the most are ones that convert existing square footage into usable space. Attic bedroom remodels rose in the report from eighth place to fourth; a homeowner who converts their dusty attic into sleeping quarters can recoup 84.3 percent of its remodeling costs at resale. Basement remodels also saw an improvement of 10.4 percent over last year; one will recoup 77.6 percent of its cost at resale.

Finishes Matter
Overall, homeowners will get the biggest returns by upgrading worn elements of their homes. But the size of the return often depends on the type of finish they choose. Take siding: the most expensive option, foam-backed vinyl, recouped 78.1 percent, while the cheapest option on the list - vinyl - recouped 78.2 percent. The cost of fiber-cement siding falls between the two, but it proved to be the biggest earner, recouping 87 percent of its cost at resale. Unlike siding, buyers seemed to have little preference when it came to windows, as both vinyl and wood saw similar returns on investment, recouping 76.6 percent and 74 percent, respectively. However, the choice of building material mattered when it came to decks. A wood deck installed for under $10,000 recouped 87.4 percent, while a composite deck that costs around $35,000 only recouped 65.1 percent.

The Heart of the Home
Three types of kitchen remodels were analyzed in the report. A major kitchen remodel costing over $100,000 recouped 63.6 percent, while a midrange remodel costing just half that recouped 74.2 percent. A more affordable $20,000 update of a kitchen saw a return of 82.7 percent of the initial investment - proving that sometimes, you don't have to spend a lot to make a lot.

Verified RealtorGovernment Housing Programs SpecialistHELP Certified SpecialistCertified International Property SellerShort Sales and Foreclosure ResourceProperty Management CertificationHousing and Urban DevelopmentCompass Career CertifiedEqual Opportunity Housing

Porama SrijindaPorama Srijinda, MBA
Broker Associate, REALTOR®,