Our homeowners clients are smart: They want to spend money wisely. And they want to enjoy life by improving their homes. It’s a balancing act, for sure.
Luckily, there’s research available about how much bang for your buck that certain home improvement projects give homeowners like you, to help you gauge your return on investment. So let’s explore local trends and deep-dive into the research data from the National Association of Realtors, Home Remodelers magazine from their 2022 “Cost Vs Value” report. *In order to make informed decisions on which projects to take on during home ownership tenure, or before listing a property for sale, consult the objective professionals at Tony Clark Realtors for the most up to date information.
What home improvement projects yield the best return on investment?
Typically, the basic upgrades – from painting the walls neutral colors to installing new fixtures – offer the largest returns.
After those, homeowners can add value by undertaking renovation projects that bring their homes up to – but not beyond – community norms.
Projects known to offer a good return on investment include garage door replacement, siding replacement, steel entry door replacement, deck addition and minor kitchen remodel.
What home improvement projects yield the worst return on investment?
Projects that take a home significantly beyond community norms are often not worth the price they cost in a resale situation (over-improvement).
High-end appliances and inground pools may benefit a homeowner’s quality of life, but if they offer a very low return on investment, and unfortunately have minimal impact on appraisal value.
A solid sound home structure is the first priority
It’s smarter to spend money to resolve structural issues first before anything else, as many home buyers may not even consider your property at all if the home does not seem structurally sound. Home buyers who find structural issues may think: “money pit”, and factor that into their offer. Think stable foundations and roofs first always.
How long until a home improvement project pays for itself?
The longer a homeowner stays in a property, the greater the opportunity for a return on investment. Owensboro Homeowners remain in their homes an average of 9 years. Clark Realtors anticipates this period to lengthen in the next years as home owners continue to age in place and try to avoid inflation.
What you get back from your investment depends on the value of your home, what features other homes around you have, and what the market is like.
How does home improvements return on investment varies by location?
Certain repairs, particularly maintenance-related, have different returns on investment based on geographic region. Roof replacement, for example, has a higher return on investment in areas with bad weather. Central air conditioning has a higher return on investment in warm areas where it matters more.
Let’s look at the data on Cost Vs Value per project type specifically for our region: SouthEast, Western Kentucky, USA):
Are ‘green’ renovations worth it?
It all depends. Some green renovations, such as adding Energy Star appliances and extra insulation, are likely to pay the homeowner back in lowered utility bills relatively quickly. By purchasing an energy-efficient product or renewable energy system for a home, the owner may be eligible for a federal tax credit based on EPA-established guidelines.
The Bottom Line:
Few home improvements return 100% of the cost, unless you are in a hot market. It’s important to pay attention to your local market when deciding which home improvement projects will pay off more. Square footage is generally a good bet to add value, though not if you add so much that your home is an outlier in your market. Energy saving improvements can pay off simply in saving you money, and in some cases, boost home value also.
Whether you are selling a your home, just purchased your first home, or a homeowner planning to stay put for a while, there is value in knowing which home improvements projects will net you the most ROI (return on investment).
Tony Clark Realtors believes everyone should feel confident when buying and selling a home. We are here to be your trusted adviser. Since 1976, we are the Owensboro Kentucky market expert. We would be honored to guide you home too.
Tony Clark Realtors | 2934 Frederica Street Owensboro, Kentucky | (270) 683-SOLD