If you’re thinking about sinking some money into a kitchen and bath remodeling project or other home improvement projects this year, keep a few things in mind. What you’ll get back on your investment depends on the value of your house, the value of houses in your immediate neighborhood, the housing market where you live, how soon you sell after making improvements, and the quality of the project itself. Installing a $10,000 stove in a $200,000 house, for example, “just doesn’t compute,” says Ron Phipps. Nor does it make sense to update your kitchen if your house is the only house in the neighborhood with just one bathroom.
Which Home Improvements Pay Off?
Here, the scoop on home improvements that will give you the biggest bang for your buck:
Kitchen and Baths:
In the hottest housing markets, springing for a kitchen or bath remodel is a sure-fire investment, often returning more than 100 percent of the cost. Two key points to consider, however: First, don’t spend money remodeling the bathroom if it’s the only one you’ve got. Your money is better spent adding a second bath. Many people love “the charm of older homes,” says Long Beach, Calif., based realtor Dick Gaylord. “But a number of older homes lack a sufficient number of bathrooms. So if you’ve got a four-bedroom, one-bath home, it’s certainly going to pay to add a second bathroom.” A National Association of Realtors study by Florida State University professors G. Stacy Sirmans and David Macpherson found that adding a bathroom increased the sale price of a home by 8.7 percent, more than twice the rate for adding a bedroom. Second, if you’re not planning to move in the near future, spend your money remodeling in a way that you’ll most enjoy. Realtor Ron Phipps recently showed a house with a kitchen that had been remodeled just two years ago. “I opened the Viking range and the original packaging was still inside,” Phipps says. The homeowners “are not cooks. The kitchen is terrific, it’s magnificent, but they don’t use it.” In other words, you can’t measure the value you get out of your use and enjoyment of the home improvements you make. “Even if you get less than 100 percent of your money back, you’re really ahead of the game over time because you get the use of all that space,” says Sal Alfano.