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Alongside the many ongoing costs of owning a home, if you want to change something about your house, you’ll incur the expense of remodeling. Depending on what you want to do to your house, your costs will vary — it makes sense that repainting a few bedrooms is going to be cheaper than, say, tearing out your 1970s-era kitchen and replacing it with sleek, modern features and appliances.
You might try to justify the cost involved with such a project by thinking that whatever you spend on it will eventually be returned to your checking account in the form of a higher price when you sell your home. But this could be a mistake, depending on the type of remodel you’re undertaking.
Remodeling Magazine recently collected data about project costs as compared to their value at resale, and found that most common remodeling projects don’t generate a complete return on investment. Here’s a look at the ones that do — and a few reasons why remodeling your home could be worth it even if you don’t get more money when you sell the house.
These projects generate the best ROI
According to Remodeling Magazine’s “2023 Cost vs Value Report,” there are only four projects that saw a return on investment (ROI) of 100% or better on a national level. These were:
- Converting your HVAC system from a fossil-fuel-burning furnace to an electric heat pump (cost recouped: 103.5%).
- Replacing your garage door (cost recouped: 102.7%).
- Adding a manufactured stone veneer to the bottom third of your home’s street-facing facade (cost recouped: 102.3%).
- Replacing your front door with a steel one (cost recouped: 100.9%).
Interestingly, none of these projects are especially swoon-worthy if you’re a homeowner (although, as someone who lives in a state with severe winters and correspondingly high winter energy costs, I am hoping to convert my HVAC to electric when I buy a home next year).
Instead, you’re probably dreaming of a newly redone bathroom or perhaps building a new deck on the back of your home. Since projects like this won’t pay for themselves when it’s time to sell your house, should you bother with them anyway (assuming you can afford them, that is)? I say yes, for one big reason.
Would remodeling keep you from moving?
I have moved house under every possible circumstance (including multiple job relocations, an unsafe living situation, and having a rental home sold out from under me). Moving is stressful and expensive, and there’s an extra layer of expense if you own your home and must sell it alongside moving into a new one. But if you can put off selling your home by instead remodeling it in a way that makes you want to live there for longer, that’s a win.
The money savings can be significant here, too. As of this writing, the average rate on a 30-year fixed-rate mortgage loan is 6.9%, per Freddie Mac. If you bought your home at a lower rate than this, it’s likely going to hurt to give up your low rate in favor of this one. Plus, home values are still elevated and supply is low, so buying a new home in the near future is likely to be an even more stressful prospect than usual.
Being happy in your home is important
I might be uniquely positioned to appreciate the ability to remodel a house for the sake of your own enjoyment and happiness, since I haven’t had much of a chance at that as a renter. But I do think putting the time and money into a house to make it a better place for you to live is worthwhile — even if you don’t get to recoup the cost of that new kitchen or bathroom when you decide to sell.
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