Your home is your most significant financial outlay, so it is essential to understand the best ways to invest in it. We turned to Today’s Homeowner to learn about the typical return on investment (ROI) for 34 home remodeling projects among 1200+ U.S. markets. For each remodeling project, they computed the average cost, the probable value added to the home, and the percentage of the project cost recuperated, which we call the ROI.
Everywhere you look, the home improvement industry is flourishing. Due to Covid, Americans spend more time at home, and many want to remodel to create a more comfortable home. The overall volume spent on renovations and upgrades climbed by almost 27% between 2020 and 2022.
What can we expect for 2023?
According to statistics from the Joint Center for Housing Studies of Harvard University (JCHS), homeowners spent $337 billion in home improvements and repairs in 2020, $368 billion in 2021, and an estimated $427 billion in 2022.
However, spending on home improvements for 2023 is expected to grow more modestly. But they will continue to grow as relatively high mortgage rates will entice homeowners to renovate their homes rather than search for a new one.
A new Houzz survey conducted in October 2022, indicates that the vast majority of homeowners are continuing with their scheduled home improvement projects regardless of the increasing materials and labor costs and the uncertain economic climate.
How does Colorado compare to other states?
Good news: The West holds seven of the top ten states with the highest average ROI with the average cost recovered at 76.9%. Besides Denver, the other states include Hawaii, California, Montana, Washington, Nevada, and Oregon.
But which Home Improvements add the most ROI to your Home?
In 2023, a home improvement project’s average ROI (return on investment) is 56%. This means when the homeowner sells the home they will receive $56 back for every $100 spent on home improvements.
Exterior home improvement projects have the highest ROI, some over 100%. The pandemic created a desire to create a home environment in which you did not need a vacation. Thus, remodeling outdoor spaces are a top concern for most homeowners. Our current market brings an ROI of an inground pool to 90%, but before the virus, it was difficult to sell a home that had a swimming pool. A composite deck has an ROI of 86% and a wood deck of 80%.
It was a surprising discovery to learn that a finished basement resulted in an ROI of only 22%. The top spot with a 147% recovery rate is Hardwood floor refinishing, trailed by new wood flooring with an ROI of 118%.
Rising costs of materials have homeowners turning to interior designers to help them value engineer their home improvement projects for the biggest bang for their buck. If you are like most homeowners, you are likely procrastinating because you haven’t had the time, weren’t sure where to begin, have no idea who to trust, or don’t know the Denver interior design trends you would like to capture. We will work closely with you so we can identify, anticipate, and accommodate your needs and then match you to Denver’s top interior designers, architects, builders, contractors, and realtors.
