Home Improvements That Increase Value

Renovations can be a great way to improve the comfort and functionality of your home. Certain improvements may even help increase the value of your home if you're planning on selling.

Whether you're choosing just one home improvement project to tackle or prioritizing a long list of renovations, estimating the potential return on investment, or ROI, can help you focus on the improvements with the biggest impact.

Do all home remodeling projects add value?

Whether a home improvement project will increase resale value depends on a variety of factors. Location has a big impact, as amenities and upgrades that are popular in one area of the country may not be as highly sought-after in others. Economic conditions and the current housing market play a role as well.

It's also important to consider the present condition of your home. Generally speaking, renovations to a fixer-upper will likely have a bigger impact on property value than improvements made to a newer home.

What is the average ROI for renovations?

According to an analysis conducted by Today's homeowner, the average ROI for home improvements is 69%—which means that every $10,000 spent on remodeling could raise the value of a home by $6,900. However, some renovations will provide a higher ROI than the average, while others can result in a significantly lower payback. Each project is unique, and the type of home remodeling project is one of the biggest determinants of actual return.

Which home improvements add the most value?

When it comes to home improvements that add value, projects that increase curb appeal tend to have high ROI, according to the 2023 Cost Versus Value, or CVV, report by Zonda Media. Those that add functional living space or maintain the structural integrity of your home also tend to perform well.

Here's how 10 popular home remodeling projects stack up.

1 Flooring upgrade

For improving the appeal and longevity of your home's interior, you can't beat upgraded flooring. The latest Remodeling Impact Report (PDF) from the National Association of Realtors, or NAR, found that refinishing hardwood floors and installing new hardwood floors are two of the most profitable home remodeling projects you can undertake—with average ROIs of 147% and 118% respectively. What's more, a majority of homeowners report feeling extremely satisfied after completing these projects.

2 HVAC conversion

Per the CVV report, heating, ventilation and air conditioning, or HVAC, conversion projects are becoming increasingly popular. Compared to gas heating systems, electric furnaces are typically less expensive to maintain and may help lower energy costs while also reducing reliance on fossil fuels. On average, homeowners who convert their HVAC system from gas to electric can expect an ROI of 103.5%.

3 Garage door replacement

Updated garage doors help elevate a home's curb appeal while adding functionality. As of 2023, the average job costs slightly more than $4,300 and may add $4,418 to a home's resale value, according to the CVV report, allowing you to recoup slightly more than what you paid for the replacement.

4 Manufactured stone veneer

Adding manufactured stone veneer is a relatively simple home improvement that may dramatically change your home's exterior appearance. The CVV report says homeowners will spend an average of $10,925 for this project and get back $11,177 in value—resulting in a typical ROI of 102.3%.

5 Entry door replacement

Installing a new steel entry door with glass panels is another way to increase the curb appeal of your home. The CVV report says the typical project costs $2,214 and returns $2,235 in value. That’s slightly more than a dollar-for-dollar exchange, resulting in an average ROI of 100.9%.

6 Siding replacement

Replacing outdated, faded or damaged siding can dramatically change the look of your home and give prospective buyers a good first impression. However, the type of siding you choose will have an impact, says the CVV report. With an ROI averaging 94.7%, vinyl siding offers a bit more bang for your buck than fiber cement siding, which typically yields an ROI of 88.5%.

7 Kitchen remodels

The kitchen is a gathering spot for many families, making it a popular space to renovate. While investing in your dream kitchen may bring you enjoyment, if you're planning on selling your home soon, a light kitchen remodel may offer a higher ROI than a more major overhaul. According to the CVV report, a minor kitchen remodel costs an average of $26,790 and offers an ROI of 85.7%. Contrast this with a major kitchen remodel, starting at an average cost of $77,939, with an ROI of only 41.8%.

8 Closet space

It seems like everyone wants more storage these days, so adding closet space or improving the functionality of existing closets may make sense. Even better? The latest NAR report found that homeowners typically recover 83% of the cost for a closet renovation.

9 Window upgrades

Replacing old, drafty windows with new energy-efficient models is a popular way to both change the look of your home and save on energy bills. However, the CVV report shows a lower cost recovery than for other projects. By choosing vinyl windows at an average cost of $20,091, your home's value may increase up to $13,766, delivering an ROI of 68.5%. If you go with wooden windows at an average cost of $24,376, the value may jump by $14,912, with an ROI of only 61.2%.

10 Bathroom remodels

Per CVV, the average cost of a bathroom remodel runs $24,606 for a 5-foot by 7-foot room with midrange fixtures. Surprisingly, the project increases a home's value by an average of just $16,413, which is an ROI of only 66.7%. And while adding a new bathroom can have a huge impact on the functionality of your home, you may see only a moderate impact on value. Homeowners typically recover just 63% of the money they spend on this project, according to NAR.

How to pay for home renovations

Once you've decided to proceed with a specific project, you'll need funding to turn your renovation dreams into reality. Start with an estimate and establish a firm spending limit. From there, you can explore how to finance home renovations. There are several options to consider, and your choice may largely depend on how much money you need, your project timeline and whether you're able to tap into your home's equity—which is its current market value minus the outstanding balance on the mortgage or any loans secured by the property.

Affordable home improvements

If big home improvement projects are outside of your budget, know that smaller renovations may also have a positive impact on your home's value. Repainting exterior doors, cleaning up your landscaping and adding plants are all budget-friendly ways to increase your home's curb appeal. Inside, simple updates like repainting with modern, neutral colors, recaulking in bathrooms or having carpets professionally cleaned may have a huge impact on the look and feel of your home.

Key takeaways

• Projects that improve a home's curb appeal typically offer high returns.
• Before pursuing a home improvement project, research market trends to determine which renovations may have the greatest impact.
• Big home renovation projects aren't necessarily required. Even minor cosmetic improvements may have a positive impact on the value of your home.