Remodeling or thinking about remodeling? Find out where projects rank and which retrieve the best return on investment. Hmmm ... some may surprise you!

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COST RECOVERY ON INTERIOR AND EXTERIOR PROJECTS

Home remodeling is currently in full swing with spring knocking on our door, and it is important to know the financial impact certain remodeling projects can have on our pocketbooks. Homeowners and renters remodel, redesign, and restructure their homes for a number of reasons. I will share the latest on the most recent home remodeling impact report, and I will also share additional key findings.

The latest home remodeling impact report was conducted through a survey from about 4,000 respondent consumers compiled by the National Association of Realtors (partnered with the National Association of Remodeling Industry). It dives into several outcomes, but what I am going to focus on has to do with the COST RECOVERY ON INTERIOR AND EXTERIOR PROJECTS, including how much REALTORS® estimate homeowners can recover on the cost of the projects if they sell.

Why is this important to know? Well, for one thing, if you plan to move in the next few years, this information will be incredibly helpful in educating you on making wise decisions with which projects to prioritize over others and what will bring you the greatest return.

>>> SEE BELOW to access the full 58-pg. report directly from the National Association of Realtor's site. <<<

WHAT IF YOU DON’T PLAN TO MOVE IN THE NEXT FEW YEARS?

You still want to make wise decisions when it comes to remodeling to get the biggest bang for your buck. A perfect example is shown below where INSULATION UPGRADE has a 100% cost recovery. On top of that, you will be saving monthly on your utility bills.

This one always shocks people when they see this in the top 5 of the greatest ROI on home projects. I remember back in 2016 or 2017 when I was a Realtor, insulation upgrade came in as the #1 remodeling project with the greatest ROI at 107%. Six or seven years later, it is still ranked at #3 and only decreased seven percentage points. I would say insulation upgrade is a smart choice, regardless. Many skip over this upgrade because it isn’t a ‘pretty’ upgrade that brings instant gratification, but your pocketbook sure loves it!

According to a 2021 Harvard University Joint Center for Housing Study called, ‘Improving America’s Housing’, Americans spent $420 billion in 2020 on remodeling their homes. Among NARI members, 90 percent found a greater demand in contracting in remodeling work during the COVID-19 pandemic. Sixty percent of NARI members cited the scale of the projects increased either in a larger project or remodeling more than one room due to the pandemic.

While most consumers (83 percent) cite they would have remodeled regardless of the pandemic, 86 percent of consumers report remodeling one area of their home made them want to then remodel other areas of their home.

When consumers remodel, it is to upgrade worn-out surfaces, finishes, and materials; to add features and improve livability, and because it is time for a change. As you can see, coming in at the #1 spot for an interior remodeling project is HARDWOOD FLOOR REFINISHING with a whopping 147% cost recovery. There is something very beautiful and pristine looking about a newly remodeled hardwood floor. You almost don’t want to walk on it, it is so beautiful.

For the purpose of costs collected, NARI members were asked to expect the home was a 2,495 square foot house—the average size according to U.S. Census data—and that the house is a post-1981-built home with no hidden issues. To ensure the most applicability, projects and materials represent standard or typical quality; a few projects feature “better-quality” materials. But there are no top-of-the-line projects.

KEY FINDINGS

1. During the time period of 2019 – 2021, home improvement projects and spending grew significantly by 20% to $624 billion, according to American Housing Survey data.

2. Many homeowners choose ‘do-it-yourself’ projects to save money, which is wise … and many times fun. Homeowners DIY’d nearly 53 million of their projects. That number accounts for 39% of total projects and 20% of total spending in a two-year time period.

3. The COVID pandemic took a toll on many and the number of homeowners that could “easily” pay for improvements decreased. And, now upcoming projects may hinge on the economy. While homeowners anticipate spending $7,746, on average, on home improvement projects over the next two years, inflation (44%) and whether or not we’re in a recession (27%) are just a few of the economic factors that will play a role in many of their decisions, the survey found.

ACCESS THE FULL REPORT: To download a detailed 58-page report directly from the National Association of Realtors' site, click here.

If you are currently in a pinch with your finances, but are in need of several remodeling projects, focus on those that can immediately save you money or makes the most sense, such as insulation upgrade to save on utility costs!

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