Will Your Remodel Pay Off?

Whatever your reasons are for taking on a home improvement project, it’s wise to consider how the money you invest will impact your home’s value.

I’ve taken a look at ten popular home renovations and identified those that—on average—have the best and worst returns on investment. So before you lift a hammer or hire a contractor, take a look at this list and see if your remodelling efforts will reward you when it comes time to sell.

These improvements and their value can generally be applied to the real estate market; however, homeowners on Bowen Island who purchased after December 2016 will want to take a very close look at the local market before taking on a major project. The average closed sale price on Bowen Island at the end of May 2019 had fallen to March 2017 levels. Some predictions suggest continued softening before prices level off near the end of 2020 and begin to rebound in January 2022 , and others see recovery starting as early as 2020.

RENOVATIONS THAT CAN PAY OFF

These five common home improvement projects not only add function and style to your home, but they also offer a strong return on investment. Making strategic upgrades to your property will help you increase its value over time.

Minor Kitchen Remodel

The kitchen is often referred to as the “heart of the home,” and for good reason. Traditionally used for preparing food, it has morphed into so much more. Many of us now eat our family meals in the kitchen, it serves as a favorite spot for homework and kids’ art projects, and it’s the place guests tend to gather when we host events.

Because we spend so much time in our kitchens, it’s natural that we will eventually want to make updates and upgrades to better suit our needs and changing style preferences.

Luckily, a minor kitchen remodel is one of the best investments you can make in your home. According to The Appraisal Institute of Canada’s (AIC) calculations, kitchen facelifts typically pay back about 75 to 100 percent of their cost, making them the most popular and beneficial home renovation investments.

The key to making a kitchen remodel payoff is to keep it modest in scale. Spend too much on custom or high-end selections, and you are less likely to recoup your investment. Instead, make an effort to keep your existing layout if it works for you and your family. Paint or reface cabinets instead of replacing them. Update countertops with low-maintenance quartz and swap out old light fixtures with modern alternatives. Replace outdated appliances with energy-efficient models. The average cost for a minor kitchen remodel is $15,000, and it’s likely to recoup more than $11,250 at resale.

Bathrooms

Similar to the kitchen, the washrooms in your home offer a nearly 75 to 100 percent return on investment. Even if you don't want to replace the tub and shower in their entirety, a new state-of-the-art showerhead, faucets, and other small renovations really make a difference in the long run.3 Bathroom renovations can vary widely, from a few thousand dollars to replace existing fixtures to upwards of $23,000.
Photo by Chastity Cortijo on Unsplash

Floors

AIC confirms that you can count on a payback of approximately 50 to 75 percent when you replace old or outdated flooring. Replacing aging hardwood and tile or installing new carpet or laminate can give your home a polished feel.3 Non-exotic species solid wood floors can cost between $7.50 and $21 per square foot installed. The more popular option, laminated wood flooring costs, installed, from $6.25 to $12 per square foot.

Closets

While it's hard to put an estimate on the rate of return a well-designed closet will incur, potential buyers consider closet space when taking a walk-through of a potential home. A well-designed, organized closet with ample storage space and other features is a great selling point. A small investment in new closet storage, shelving, hooks and hangers can go a long way when trying to get the best return on your investment.3 Custom closets can cost between $700 and $2000 for 8 linear feet, depending on the options chosen.
Photo by Андрей Постовой on Unsplash

Energy upgrades

Whether you're thinking about new energy-efficient windows, a new furnace, or solar panels on your roof, energy upgrades are a hot trend in home building and renovations, and typically bring with them at least a 50 to 75 percent return upon resale.3 EfficiencyBC is a new Provincial program offering financial incentives, information and support to help households and businesses save energy and reduce greenhouse gas (GHG) emissions by switching to high-efficiency heating equipment and making building-envelope improvements.

OTHER IMPROVEMENTS THAT CAN ADD VALUE

A cost vs. value report out of the USA suggests that adding a wood deck and replacing siding are also improvements to consider.

Wood Deck Addition

A deck addition is a popular way to extend and enhance the use of your outdoor space. It’s the perfect spot for grilling, dining alfresco, and entertaining. In fact, 81 per cent of surveyed homeowners said they have a greater desire to be home since completing a deck addition.
For a 16 x 20-foot wood deck, you can expect to spend around $14,400. Fortunately, the money you invest offers an average return of 73 per cent or more.

Decks made of composite material are a popular alternative these days, as they don’t require the regular sanding and staining that wood decks need. However, at an average cost of $14,000 for a 16 x 20-foot composite deck, they are significantly more expensive. Plus, the expected return on investment is not as high as a wood deck.4 Still, if you plan to hire someone to provide regular maintenance to a wood deck, then a composite deck may offer cost savings over time. Photo by Markus Spiske on Unsplash

Siding Replacement

Everyone knows good curb appeal is important when selling your home. And while it may not be the most exciting way to spend your remodeling budget, new siding can make a big impression on buyers … and your selling price.

Your home’s exterior is one of the first things buyers see when they view your home. It sets the tone for what they are going to see inside. It also gives an impression of how well the property has been maintained. Worn, peeling, or rotted siding can be a major red flag for buyers.

Replacing 1,250 square feet of cedar siding costs around $14,000 and will net you an average of 76 per cent at resale.

For an even greater impact, consider replacing a portion of your siding with manufactured stone veneer. It can have a dramatic effect on the visual appeal of your home. A 300 square foot area will run you around $6,825, but you can expect to see a nearly 95 per cent return when it comes time to sell.5 5

RENOVATIONS WITH WEAK RETURNS

These three popular remodelling projects are homeowner favourites. However, don’t expect to see a high rate of return at resale. Instead, consider them an investment in your current quality of life. Just make sure you’ll be living in the home long enough to make them worthwhile.

Major Kitchen Remodel

If there’s one room the majority of homeowners dream about making over, it’s their kitchen. From custom cabinetry to high-end appliances, the possibilities are endless. But those dreams can come at a cost.

An upscale kitchen remodel with high-end cabinetry and countertops, commercial-grade appliances, and designer features can cost upwards of $45,000. And unfortunately, you’ll only get back around 60 per cent at resale. Even a mid-range kitchen remodel that includes new semi-custom wood cabinets, laminate countertops, and energy-efficient appliances could run you around $28,000 and net you a mere 62 per cent at resale.2

Of course, an outdated or non-functional kitchen could turn buyers off from your home completely … and keep you from enjoying it yourself! So if your kitchen needs a major remodel, you shouldn’t necessarily scrap your plans. Just go in with the realization that you may only get back a fraction of what you invest. Then you can decide which upgrades are worth the splurge.

In-ground Pool

Photo by Jesse Gardner on Unsplash

Few additions deliver more entertainment or enjoyment than an in-ground pool. It brings families and friends together, provides a break from the summer heat, and offers a fun and convenient way to stay fit. Plus, you’ll be the envy of your neighbors! But before you dive into a pool addition, consider whether the benefits outweigh the (substantial) costs.

The average expense to install a standard 18 x 36-foot in-ground pool is $22,000 to $32,000. And the estimated return at resale is only or 43 per cent. In addition to the installation cost, plan to spend money each year on maintenance, repairs, and additional insurance.

However, 92 per cent of surveyed homeowners said they “have a greater desire to be home” since installing a pool, and 83 per cent have “an increased sense of enjoyment when they are at home.” For you and your family, the perks of a pool may be priceless.7

Master Suite Addition

If you own a house built before the 1980s, there’s a good chance it lacks a master suite, which is a feature that has become commonplace in most newly constructed homes.

Master bedrooms have evolved from a simple place to sleep into a homeowner’s retreat—often featuring a sitting area, his-and-hers walk-in closets, and an attached bathroom with double vanities, a soaking tub, and a walk-in shower.

And master suite additions have become increasingly popular—both in homes that lack one as well as those with aging owners who can no longer accommodate stairs to an upper-level bedroom.

But what’s the typical return at resale? Unfortunately, a master suite addition offers one of the lowest returns of any remodeling project. With a median cost of $125,000, most sellers will only recoup around 52 per cent of their investment. Nevertheless, in a survey of homeowners, the majority were satisfied with their decision to add a master suite, giving it a “Joy Score” of 10 out of 10.

WEIGHING COST VS. BENEFIT

It’s always wise to enter into a remodeling project with knowledge of how it will impact your home’s value. In most cases, upscale or highly-customized upgrades are less likely to offer a high rate of return. That said, home renovations that improve your quality of life and enhance your enjoyment may be worthwhile no matter the cost.

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