The home resale market has picked up in the last few years, with prices very nearly recovering all the ground they lost during the great recession. The home remodeling market is recovering as well, and is now a $300 billion industry, according to the Joint Center for Housing Studies of Harvard University.
Why are people still hesitant to buy, but ready to sink more money into their old house? Part of the reason is because the percentage of existing homes available for sale is near an all-time low, so there aren’t many choices if you want to move to a new home. But also more people, including retirees, are beginning to appreciate their old home, which may be in a better location – closer to town, in an established neighborhood – while still recognizing that the old place may need some work.
The average renovation pays back about 65 percent of its cost if you sell your house soon after the remodel is completed, according to a Remodeling Magazine survey of real estate professionals. But the amount of payback varies widely, depending on the type of improvement. Here are five home improvements that are likely to pay off:
Replace the front door
You know what they say about first impressions, and so improving the entrance to your home makes an outsized difference in the way someone looks at your house. Replacing an old, squeaky front door that lets a draft blow through the front hallway offers a great bang for your renovation buck.
Replace the garage door
A bright new garage door, for a relatively modest cost, gives your house a brand new face to the world. According to the Remodeling Magazine survey, a new garage door returns almost 90 percent of its cost when you sell your house.
New siding
Once again, it comes down to curb appeal. New siding not only makes your house look better, but it also promises to cut down on future maintenance issues. Modern vinyl siding is fade resistant and typically comes with warranties covering over ten years. Fiber cement siding and manufactured stone veneer are more expensive but offer a high-quality look that many future buyers will appreciate.
Create a multipurpose room
Make a spare bedroom multifunctional by swapping out a traditional bed for a new wall bed. That way, you can use the space for a home office, den, craft area, or other things without losing your guest room. Potential buyers will have a special space in their minds when they tour the home, and the reality of an existing multipurpose room is the key to satisfying whatever they may have planned.
New windows
Upgrading your windows offers a solid payback for the same reasons as replacing a front door – new windows brighten up your home and improve insulation, cutting down on drafts and saving utility costs.
Kitchen upgrade
Modern families spend most of their time in the kitchen, and so an investment to improve the look and functionality of this popular room is typically a good one. The key: buy good quality appliances and solid kitchen cabinets. But don’t go overboard. While the special wine cooler, high-tech trash compactor and supersize refrigerator may seem very special, few home buyers actually want to pay for them.
No matter what you do, don’t “overimprove” your house. It doesn’t make sense to spend $100,000 on a new kitchen renovation if your house is only worth $300,000, or if your house only has one bathroom. And while adding insulation may pay back well in the Northeast, it will not add as much benefit where the climate is more moderate.
Before you decide on any renovation, look at your house with a critical eye. What aspects of your house are important? What are its drawbacks? Fix the drawbacks, and focus on the important items.
