How Much Will That Renovation Cost You?
on Wednesday, August 4, 2021
Is your home overdue for some upgrades?
Are you finally ready to design your dream kitchen? You’re not alone. Home remodeling activity is booming right now. Despite the economy shrinking 3.5% in 2020, home improvement spending grew by 3% last year — and it’s projected to rise another 4.8% through Q1 2022.
Renovating your house can provide valuable benefits, such as improving energy efficiency, creating more usable space and convenience, or simply enhancing the aesthetic — all of which makes your home a more enjoyable place to live. But there’s one big question every homeowner must face when considering a remodel: Is the cost worth it?
We’ve summarized findings from Zonda’s 2021 Cost vs. Value report to shed light on the average upfront cost for common projects, and the potential return on investment (ROI) you could achieve upon resale.*
Projects With the Highest ROI
|Project ||Job Cost ||Resale Value ||Cost Recouped |
|Garage Door Replacement ||$3,907 ||$3,663 ||93.8% |
|Manufactured Stone Veneer ||$10,386 ||$9,571 ||92.1% |
|Minor Kitchen Remodel, Midrange ||$26,214 ||$18,927 ||72.2% |
|Siding Replacement ||$19,626 ||$13,618 ||69.4% |
|Window Replacement, Vinyl ||$19,385 ||$13,297 ||68.6% |
Projects With the Lowest ROI
|Project ||Job Cost ||Resale value ||cost recouped |
|Master Suite Addition, Upscale ||$320,976 ||$152,992 ||47.7% |
|Bathroom Addition, Upscale ||$103,613 ||$54,701 ||52.8% |
|Bathroom Addition, Midrange ||$56,946 ||$30,237 ||53.1% |
|Major Kitchen Remodel, Upscale ||$149,079 ||$80,284 ||53.9% |
|Master Suite Addition, Midrange ||$156,741 ||$85,672 ||54.7% |
Top 3 Most Desired Improvements
- Minor bathroom remodel
- Minor kitchen remodel
- New porch, deck or patio
Source: Harvard Joint Center for Housing Studies
Remodeling the Kitchen or Bath: Striking a Balance
The most popular remodels tend to be the most expensive, and the more upscale the project, the lower the return on investment. If you’re considering one of the big two — a bathroom or kitchen remodel — keep in mind that the size and scope of the project will largely influence the cost and ROI.
| ||Bath remodel, Midrange ||Bath Remodel, Upscale |
|Features ||Update existing 35 sq. ft. space ||Expand space from 35 sq. ft. to 100 sq. ft. |
| ||Porcelain-on-steel tub with ceramic tile walls ||Walk-in shower with frameless glass enclosure |
| ||Standard Toilet ||Soaker tub with high-end faucets |
| ||Vanity with integrated sink ||Double sinks with stone countertop |
| ||Recessed medicine cabinet with light ||Compartmentalized toilet area |
| ||Ceramic tile floors ||Heated floor and large ceramic floor tiles |
| ||Vinyl wallpaper ||Wall cabinets |
|Cost ||$24,424 ||$75,692 |
|ROI ||60.1% ||54.8% |
| ||Minor Kitchen remodel, midrange ||Major Kitchen Remodel, Midrange ||Major Kitchen remodel, upscale |
|Features ||Replace cabinet doors and hardware (keep existing cabinet boxes) ||Semi-custom wood cabinets ||Top-of-the-line custom white cabinets with built-in sliding shelves |
| ||Energy-efficient oven range ||3 x 5 foot island ||Stone countertops |
| ||Energy-efficient slide-in-fridge ||Laminate countertops ||Imported ceramic or glass backsplash |
| ||Replace laminate countertops ||stainless steel sink (double basin) ||Built-in fridge |
| ||Mid-priced sink and faucet ||Energy-efficient range, range hood ||Commercial-grade cooktop and hood |
| ||New flooring, paint, trim ||Built-in microwave ||Wall oven / Built in Microwave |
| || ||Dishwasher / Garbage Disposal ||High-end undermount sink with designer faucets |
| || ||Custom lighting ||New overhead and under-cabinet lighting |
| || ||New flooring, paint, trim ||Wood-like tile flooring |
|Cost ||$26,214 ||$75,571 ||$149,079 |
|ROI ||72.2% ||57.4% ||53.9% |
All kitchen scenarios above represent a 200-square-foot kitchen with 30 linear feet of cabinetry.
While a kitchen or bath remodel won’t provide as much ROI as a new garage door or stone veneer, it’s important to remember that these projects exist in a category of their own. The reasons for updating a kitchen or bathroom are drastically different than that of exterior enhancements. If your home is older and dramatically outdated, or if your layout is no longer functional, remodeling the kitchen or bathroom could be necessary. Plus, if you’re thinking about resale, these are the two most important rooms that potential buyers look for in a new home.
The key is to strike the right balance between necessity and desire. While we’d all love a kitchen that looks like it belongs in HGTV’s dream home, with professional-grade appliances and Italian marble countertops, adding too many high-end features could push you way out of your budget and diminish your ROI. It’s also important to consider comparative homes in your area: You don’t want to price your home outside of the neighborhood.
Bottom line: Don’t overdo it. Choosing quality, moderately-priced finishes can help you achieve your desired outcome, while helping you maintain a reasonable budget and providing a higher ROI.
Due to immense demand, labor and material shortages are driving up renovation costs and could result in longer-than-normal project timelines. Talk to professional contractors in your area to get a clear picture of the market, and weigh out these factors as you determine whether to move forward with your project.
Financing Your Remodel
Once you know the potential costs, the next step is to figure out how you will fund your home improvement project. Luckily, many of today’s homeowners have access to record-high equity, which can be tapped into to fund renovations. According to CoreLogic, the average homeowner with a mortgage has more than $200,000 in home equity.
Learn how our Home Equity Line of Credit and Home Equity Loans are convenient and flexible ways to use the equity you have in your home to get the things you want.
Complete your Home Equity Line of Credit or Home Equity Loan application and a banker will contact you within one business day!
Apply for a Home Equity Line of Credit
Apply for a Home Equity Loan
*These figures represent national averages. Geographic region, project scope, quality of finishes, and a variety of other factors will influence the actual cost.
Bureau of Economic Analysis, Gross Domestic Product
Harvard Joint Center for Housing Studies
Zonda’s 2021 Cost vs. Value report
CoreLogic, a data and analytics company, Homeowner Equity Insights report, Q4 2020