The housing market is booming, and homeowners are taking advantage of this opportunity to invest in their properties. While the pandemic-era frenzy of home renovations may have cooled off slightly, there are still plenty of opportunities to increase the value of your home. According to the 2024 Cost vs. Value report from Zonda Media, some projects now offer the highest return values in history, with certain upgrades averaging returns of nearly 200% for the first time ever.
Surprisingly, the projects offering the greatest returns in resale value are mostly related to curb appeal rather than more glamorous kitchen and bath remodels. In fact, nine out of the top 10 projects with the highest return on investment were exterior improvement projects, as reported by Zonda. Garage door replacements topped the list with an average return of 194%, closely followed by upgrading to a steel front door with a 188% return on investment. These numbers are nearly double what they were last year, indicating a significant increase in value.
Strategic Renovations Are Key
With rising costs for construction labor and building materials, it’s important to be strategic in your renovation efforts to ensure you get the most bang for your buck. According to Clay DeKorne, chief editor of Zonda’s JLC Group, exterior replacement projects continue to make the most sense when it comes to adding resale value to a home. He points out that only three projects on Zonda’s list can typically deliver a 100% return on investment: replacing garage doors, upgrading to a steel front door, and installing a stone veneer.
While a minor kitchen remodel can provide high returns, major upscale kitchen and bathroom remodels are not worth the investment, as they yield much lower returns. Angelica Ferguson VonDrak, an associate real estate broker, advises against expensive upgrades in the kitchen, noting that they are unlikely to pay off in the long run. Instead, she suggests focusing on “un-sexy” upgrades like HVAC conversions, new roofs, and windows, which may have a greater impact on the overall value of the home.
Financing renovations or improvements with a home equity loan or home equity line of credit may be more expensive due to the Federal Reserve’s rate hikes. It’s important to assess the financial implications of your renovation projects and choose financing options wisely. Todd Tomalak, Zonda’s principal of building products research, emphasizes the value of simple upgrades like a new garage door or entry door, which can make a significant difference in attracting buyers in a competitive market.
To ensure that you’re making the right investment decisions, it’s advisable to consult with a realtor in your area. They can provide insights into specific renovations that may increase the value of your home and advise you on which projects to skip. While a pool may pay off in some locations, it could be a costly investment with little return in others. Ultimately, focusing on practical, cost-effective upgrades and maintaining a clean, clutter-free space can go a long way in maximizing the value of your home.