There are lots of great reasons to renovate your home. If you are planning to live in your home for a while, renovating can make your house more practical and comfortable. If you plan to sell down the road, the right renovations can help your home sell faster.
Even better, renovations can increase your home’s value, increasing your home’s equity or sale price.
The possibilities for home improvements are endless but some projects provide better value for your money. That’s because most home renovations do not pay a dollar for dollar return on your investment. Instead, they return a portion of the cost. For example, a $10,000 basement renovation might increase your home’s value by only $5,000.
Whether you are thinking of moving soon or want to stay in your house for a while, we have advice that can help you make the best choices for you!
What factors contribute to the cost of home renovations?
- The size of the room. Generally, a small room is more affordable to renovate than a big room, but it can vary depending on the complexity of the project. Small bathrooms could be more expensive than a large bedroom, for example.
- Cost of materials. Appliances, cabinets, flooring, tile, and other materials can be costly and with recent supply chain challenges, you may have to spend more to get the things you want.
- The extent of the remodel. Are you just doing an update or gutting the whole area? Is it a week-long project or several months? The longer the project duration the more you will likely spend, especially on time and labor.
- Age of your home. When you break open the walls of older homes, you may find issues like outdated wiring and plumbing or inefficient insulation. These can add surprise costs to your project!
Generally, kitchens and bathrooms cost the most since they can include plumbing, electricity, cabinetry, appliances, flooring, and tiling. Bedrooms and living rooms are generally less expensive. Also, keep in mind that where you live will affect how much you will spend. Contractors and supplies could cost more in urban areas than rural locations.
How much do popular home renovations cost?
Here are some national averages for the costs of popular renovations plus their "recoup" value from the Remodeling Magazine 2021 Cost vs. Value Report. When you see "72% cost recouped," this means for each $1.00 you spend the magazine estimates you will increase the value of your home by $0.72.
- Midrange minor kitchen remodel: $26,214, 72% cost recouped
- Midrange major kitchen remodel: $75,571, 57% cost recouped
- Midrange bath remodel: $24,424, 60% cost recouped
- Midrange bathroom addition: $56,946, 53% recouped
- Asphalt shingles replacement: $28,256, 60% recouped
- Metal roof replacement: $46,031, 56% recouped
- Doors & Windows
- Garage door replacement: $3,907, 93.8% recouped
- Vinyl window replacement: $19,385, 68.6% recouped
- Wood window replacement: $23,219, 67.4% recouped
- Steel entry door replacement: $2,082, 65% recouped
Be aware that these are ranges and do not reflect hidden costs. It’s a good idea to add an extra 20% to your budget just in case. Here are some examples of how project costs can creep up on you.
- Changing your mind. If you decide on an idea and change your mind, the contractor may have to redo work or pivot to incorporate the change. Try to keep your initial decisions or be aware that you may spend more if you change your plan after work has already started.
- Structural issues. You never know what you’ll find during a remodel until you open the walls. There could be rot, pests, electrical issues, or water damage. Especially in an older home, be prepared for these surprise costs.
- Getting up to code. Inspectors can be part of renovation planning so look for issues you might need to address. Your house may have been built before standards were put in place or by someone unfamiliar with local codes. Find out what inspections your renovation may need and what standards you might be required to meet.
Home renovations can help you enjoy your home more
According to The National Association of REALTORS®, 74 percent of homeowners have a greater desire to be in their home and 65 percent have increased their enjoyment after a remodeling project. While you want to get a good value, enjoying your home is priceless.
Consider how long you will live in your home when determining which projects to tackle. If you plan to stay in your home for some time, your priority may be comfort and better living rather than increasing value for an upcoming sale.
Here are some top projects that appeal not only to buyers, but have a high resale value and consumer satisfaction rating according to the latest 2019 Remodeling Impact Survey.
- Complete kitchen renovation. After completing the project, 93% of consumers have a greater desire to remain in their home.
- Kitchen upgrade. After completing the project, 85% of consumers have a greater desire to remain in their home. This improvement often helps close a sale too.
- HVAC replacement. There was an 85% value recovered from the project.
Whatever home improvement projects you tackle, proper planning, budgeting, and realistic goals will help you set expectations to ensure the investment, time and value are well worth it.
Bank on your home: You can pay for home renovations with your home equity
At Freedom Mortgage, we can help you pay for home renovations with a cash out refinance. These refinances allow you to tap into the value of your home’s equity and get cash for important investments like upgrading your home!