Study: Renovations’ Resale Value & Alternative Solutions

July 18, 2024 / Chadmin /

It’s widely accepted that the most popular home renovations, such as kitchens and bathrooms, often produce the best return on investment. However, our extensive experience in home improvements led us to question this belief.

To uncover the facts, we delved into the data to determine whether homeowners are being misled or if they hold incorrect assumptions about which renovations yield the highest returns.

The findings are not only insightful and fascinating but also provide valuable guidance for our customers when deciding which renovations to undertake.

Key findings

Kitchens and primary bathrooms are the most frequently remodeled rooms in 2024.

Despite their popularity, these renovations typically result in financial losses, recouping only about 61% of the investment.

With US mortgage rates at a two-decade high of 8%, understanding ROI on renovations is crucial for homeowners.

Surprisingly small changes make a big difference. Refinishing hardwood floors, for example, offers an average ROI of 70% to 80%.

Renovations' Resale Value & Alternative Solutions

Popular Interior Room Renovations

By merging data from two reputable 2024 studies, we were able to uncover unique insights relating to the ROI of the most popular remodeling projects.

We found that even with bathrooms and kitchen remodels having an average popularity rate of 54% (they show the highest volume of renovations amongst all other rooms), these projects typically result in a 38% loss when homeowners try to recoup their investment through property sales.

Frequency of room renovations (amongst all renovations completed) with the renovation’s cost and ROI:

Room	Popularity of Remodels	Ave Cost of Remodel	Ave Resale Value of Remodel	Ave Return on Original Cost	Ave Loss on Original Cost
Kitchen	29%	$88,668.00	$42,056.33	61.20%	38.8%
Primary Bathroom	25%	$33,000.50	$19,380.50	61.56%	38.45%

Popularity of Remodels1

From our experience there are a few reasons why kitchen and bathroom remodels may not offer the highest financial returns:

Homeowners often over-improve for their neighborhood. Spending too much on a remodel compared to the value of surrounding homes can lead to over-capitalization and lower returns.
Kitchens and bathrooms are the most expensive rooms to remodel. Homeowners may spend more than necessary on finishes and appliances, reducing the ROI.

Market Considerations

US mortgage rates have hit a two-decade high of 8%.

As such, homeowners are choosing to renovate rather than buy something new. Homeowners should be particularly mindful of the ROI on their renovations if planning to move at another point though, a remodel may not provide enough time to recoup the investment.

High-ROI Alternatives

For homeowners looking to enhance their property’s value without incurring significant losses, smaller, cost-effective upgrades are currently more beneficial.

Here are some of the unexpected high-ROI renovations:

Garage Door Replacement:

Cost: $4,284

ROI: 254.5%

Steel Entry Door Replacement:

Cost: $2,472

ROI: 200.1%

Manufactured Stone Veneer:

Cost: $12,477

ROI: 138.0%

Vinyl Siding Replacement:

Cost: $17,548

ROI: 107.5%

These improvements not only enhance the home’s aesthetic appeal but also offer a much higher return on investment compared to major interior renovations.

Strategic Upgrades for Maximum Impact

To maximize the appeal and value, these alternatives have shown to be cost-effective upgrades with value returns:

Curb Appeal Enhancements

Simple changes like updating landscaping, a new garage door, painting the front door, and adding outdoor lighting.

Lighting Upgrades

Replacing outdated, dim light fixtures with modern, bright ones.

Flooring Refinements

Refinishing hardwood floors or installing new hardwood can dramatically improve appeal.

Installing Hardwood Floors

Average Cost: $5,500

Resale Value: $6,500

ROI: 25.4% Increase

Refinishing hardwood floors offers higher returns, significantly enhancing the appeal and value of a home. According to Forbes, refurbishing hardwood floors can help you see an average ROI of around 70% to 80%.

While kitchens and bathrooms remain popular renovation choices, they do not always provide the best financial return. Homeowners looking to sell in today’s market should focus on high-ROI improvements like garage door replacements, entry door upgrades, and refinishing hardwood floors.

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