Which renovations give you best return come sale day?
Ceiling insulation, stone veneer cladding and garage door replacements were the most lucrative home renovations in 2015, according to the latest annual report just released by US magazine Remodeling.
The 2016 Cost vs. Value Report says that, overall, renovating before putting a home on the market gave homeowners a better payback in 2015. The average return at resale for the 3000 US projects surveyed in the report resulted in an average of 64.4 per cent return on investment dollars if the home was sold within a year, or $1.64 for every $1 spent. This was up from 62 per cent the previous year.
Topping the list of best-value renovations was attic insulation, which provided a return of 116 per cent.
The second-biggest bang-for-the-buck projects were renovations that featured manufactured stone veneer cladding, which provided a 92.9 per cent return. This was followed by garage door replacements at 91.5 percent.
Installing a new steel and glass front door, which was last year's most lucrative renovation, came in fourth with a return of 90.1 per cent.
The lowest cost-value ratios were recorded by bathroom and master suite additions and renovations. However, these still provided returns of more than 50 per cent.
The report says that as a general rule, the simpler and cheaper the project, the bigger the cost-value ratio. "Four of the five types of projects that cost less than US$5000 for pro to do were ranked in the top five for cost recouped. No project costing more than $25,000 ranked better than 15th. It stands to reason that it's far easier to replace a steel entry door than it is to design, source and build a two-storey addition."
Twelve of the 15 highest-scoring projects were for work done on the exterior of the home, showing the value of increasing the street appeal.
Replacement jobs, such as door, window and cladding projects, generated a higher return than renovation projects, which has been the case since 2003.
"But in this latest report, the gap between the average replacement and the average remodeling job shrank by about two-thirds, to just 4.2 percentage points. Replacement projects averaged a return of 61.5 per cent while remodeling projects scored 57.3 per cent.
"This gap typically wanes when housing gets hot and waxes when the economy cools and there's less upside for projects at resale. The narrowing in the 2016 report may be one more byproduct of the belief that bigger projects are getting viewed more favourably by real estate pros."
In terms of the type of job, window and cladding projects fared better than kitchen and bathroom renovations. Again, the report puts this down to improved street appeal. Window and door projects had percentage returns ranging from the high 60s to the high 70s, while most kitchen and bathroom renovations were in the 50s and 60s.
And how do the figures compare to New Zealand? While there is no similar study, a good-quality renovation will usually provide healthy returns. Construction Cost Consultants says the returns on kitchen and bathroom renovations are generally around 50 per cent. And for every dollar you spend turning a three-bedroom home into a four-bedroom, you are likely to double your money.