Home renovation activity may have cooled somewhat compared to its pandemic-era frenzy, but homeowners are still investing in their spaces, particularly as the spring housing market heats up.
And when it comes to the return on investment, some projects now offer the highest return values in history — with a few home upgrades averaging returns of nearly 200% for the first time ever — according to the 2024 Cost vs. Value report from Zonda Media, a housing market research and analytics firm.
Garage door replacements offered the highest average return at 194%, followed by upgrading to a steel front door, with a 188% return on investment — both worth nearly double what they were last year, the report found.
Curb appeal is key
Forget a designer chef’s kitchen, the projects offering the greatest returns in resale value are mostly related to curb appeal rather than more glamorous kitchen and bath remodels, according to Zonda’s report.
In fact, nine out of the top 10 projects with the highest return on investment were exterior improvement projects, the report found.
“When it comes to adding resale value to a home, exterior replacement projects continue to make the most sense,” Clay DeKorne, chief editor of Zonda’s JLC Group, said in a statement.
However, with rising costs for construction labor and building materials, not everyone will get their money’s worth in improved home value.
Only three projects on Zonda’s list can typically deliver even a 100% return on investment, including replacing the garage doors, upgrading to a steel front door and installing a stone veneer.
“Discretionary projects like an upscale bathroom or kitchen remodel will feel valuable to those who make the selections but won’t provide nearly as much return to sellers,” DeKorne said.
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A minor kitchen remodel — such as painting and updating the backsplash — did provide high returns, at 96% of costs recouped. But major upscale kitchen and bathroom remodels did not, the Zonda survey found, with returns of 38% and 45%, respectively.
“Doing expensive upgrades on the kitchen aren’t going to pay off,” said Angelica Ferguson VonDrak, an associate real estate broker based in Rhinebeck, New York.
‘Un-sexy upgrades are more important’
With high home prices and a tight supply of homes for sale, sellers need to be especially strategic in their efforts to attract the buyers willing to pay top dollar in today’s market, according to Todd Tomalak, Zonda’s principal of building products research.
Further, financing renovations or improvements with a home equity loan or home equity line of credit have gotten more expensive along with the Federal Reserve‘s string of 11 rate hikes since 2022, including four last year.
“A new garage door or new entry door can make a pronounced difference,” Tomalak said. ”It could be the thing that makes one house stand out against all the others, making the home worth a higher price.”
To get the best bang for your buck, talk to a realtor in your area about specific renovations that may increase the value of your home and which ones to skip, VonDrak advised.
In some areas, putting in a pool could pay off threefold, in other locations, such a hefty investment can fall flat, she said.
“The un-sexy upgrades are more important,” VonDrak said, such as an HVAC conversion (replacing a fossil-fuel-burning furnace or boiler with an electric heat pump) or a new roof or windows.
And often, a thorough cleaning can go a long way, VonDrak said. “Certainly decluttering and swapping out old furniture for new or adding slipcovers,” she said. “You want everything to feel fresh and new.”