Which home improvements add the most value?
Important factors that impact resale value and return on your investment.
Article published: January 29, 2025
Are you, as a homeowner, thinking about making renovations to increase your home's value? You might wonder what the best home improvements for resale would be to attract potential buyers and get the most return on your investment. The following guidelines, based on The Journal of Light Construction 2024 Cost vs. Value Report and the Remodeling Impact Report – key resources in the remodeling industry – can give you a general idea on what you could recoup when you sell your home.
HOME IMPROVEMENT ROI CHART
In general, you're less likely to fully recoup your investment in a major kitchen renovation or bathroom upgrade than you are to get back what you spend on basic home infrastructure improvements such as a new roof, garage door replacement, siding or energy-efficient windows. These exterior improvements not only enhance curb appeal but also improve energy efficiency, making your home more attractive to potential homebuyers. This table reveals the 2024 national averages of what various home improvement projects cost, what they were worth at resale and the percentage of cost recouped, helping homeowners understand the project costs and potential impact on their property's value.
2024 National Average Cost and Resale Value
| Project | Job Cost | Resale value | % recouped |
|---|---|---|---|
Minor kitchen remodel (midrange) | $27,492 | $26,406 | 96.1% |
Window replacement (vinyl) | $21,264 | $14,270 | $67.1% |
Siding replacement (vinyl) | $17,410 | $13,957 | 80.2% |
Window replacement (wood) | $25,799 | $16,222 | 62.9% |
Deck addition (wood) | $17,615 | $14,596 | 82.9% |
Entry door replacement (steel) | $2,355
| $4,430 | 188.1% |
Roof replacement (asphalt shingles) | $30,060
| $17,461 | 56.9% |
Bath remodel (midrange) | $25,251 | $18,613 | 73.7% |
Major kitchen remodel (midrange) | $79,982 | $39,587 | 49.5% |
Primary suite addition (midrange) | $164,649
| $58,484 | 35.5% |
Source: The Journal of Light Construction
Keep in mind that the dollar amounts in this chart represent average costs for 23 remodeling projects with the value those projects retain at resale in 150 U.S. markets, and individual results pertaining to the return on investments may vary depending on various factors.
CHOOSING HOME IMPROVEMENTS THAT CAN PAY OFF
Typically, exterior replacement projects provide a higher return on investment than interior discretionary remodels. This may be because exterior improvements like new siding or energy-efficient windows enhance the home's value and appeal to a more universal audience of potential buyers looking for better home features. On the other end of the spectrum, however, specialty projects like swimming pools rarely return their cost because many buyers don't want to pay more for a house just to own a pool they may not even want.
When you are considering what home improvements add the most value, choose kitchen cabinets, countertops and flooring in classic or neutral colors and styles. These choices can be appealing to the largest number of potential buyers, potentially increasing your home's resale value. For example, if you want purple walls in your kitchen to match the purple grout on your fireplace, that could be fine if you're planning to stay in the house the rest of your life. But don't expect others to equally love your unique choices, as not all home buyers will appreciate the same personal touches.
For more cost-effective improvements, consider projects like applying fresh paint in neutral tones or refinishing your hardwood floors. These relatively inexpensive renovation projects can add to your home’s appeal and significantly enhance its value.
4 FACTORS THAT IMPACT YOUR HOME IMPROVEMENT'S ROI
1. Neighborhood
Don't over-improve your home relative to your neighborhood's home values. For example, if you want to spend $42,000 for a midrange kitchen remodel or a basement remodel in a house worth about $150,000, that could make sense if that home is surrounded by houses worth $200,000. But you may want to think twice about upgrading your home's value to $300,000 when it's in a $150,000 neighborhood. Over-investing in home improvement projects can lead to lower returns when it comes time to sell. Before you begin, it's wise to consult a real estate agent who specializes in your neighborhood to get input on which renovation projects to make as well as how much is too much.
2. Market
Regional differences also come into play in the real estate market. If housing is in great demand—as it is now in most of the country—buyers could be willing to pay more for your improvements. In a seller's market, investing in energy efficiency upgrades or adding living space may significantly boost your property's value.
3. Timeline
The longer you stay in your house, the more likely you are to recoup your costs from your home improvement projects. Over time, your home's value may increase, helping offset the initial investments. Additionally, the length of time you've owned your home can also impact the taxes you pay when you sell your home. Holding onto your property longer may also allow you more time to enjoy the benefits of your home renovations.
4. Hidden expenses
Be prepared for surprises. For example, you may be hit with increased property taxes when your home is reassessed after a major upgrade, affecting your overall project cost. You may also find that one home project leads to another, then another, turning a simple bathroom renovation into a series of improvement projects. Hidden expenses can escalate quickly, so it's important for homeowners to budget accordingly.
HOW TO PAY FOR HOME RENOVATIONS
Last but not least, how will you pay for these renovations? Ideally, you have already set aside funds for these home improvement projects. If not, should you take equity out of your home by refinancing your mortgage or leveraging a home equity line of credit? Your credit score will play a significant role in the financing options available to you.
This could be a good option for you if you planned to refinance anyway and the equity is pulled out with a reduced interest rate that does not push your monthly payment above what you were previously paying. What about your cash reserves? In general, using money from your emergency fund may not be the right move. There can be other options available, such as a home equity line of credit, FHA 203(k) loan or other personal loans, but these can come with a high borrowing cost, and you may not get the ROI out of the renovation upon resale. Additionally, the remodeling project might not increase your home's resale value as much as anticipated. If you are interested in a home remodel, talk with a financial planner about how this could impact your financial goals and wealth planning.
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