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Homeowners looking for ways of increasing their house's value need to look no further than the floor beneath their feet.
Refinishing a home's hardwood floors will bring the largest return on investment among the most common renovation projects undertaken by homeowners since the pandemic began, according to the National Association of Realtors 2022 Remodeling Impact Report.
Homeowners spent an estimated average of $3,400 refinishing their floors, and the project added an estimated resale value of $5,000 to the home, resulting in an eye-popping 147% return on investment.
Homeowners who decided to install new flooring also saw a very high return on investment, spending an estimated $5,500 on new wood floors but getting an estimated resale value of $6,500, or an ROI of 118%. Upgrading a home’s insulation was the only other project where homeowners recovered at least 100% of the installation cost in resale value.
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Best home improvement projects for return on investment
The following home projects topped the list for highest cost recovery:
- Refinish hardwood floors: 147% return on investment
- New wood flooring: 118%
- Upgrade insulation: 100%
- Converting a basem*nt to a living area: 86%
- Closet renovation: 83%
- Converting an attic to living area: 75%
- Complete kitchen renovation: 75%
- Bathroom renovation: 71%
- Kitchen upgrade: 67%
- New bathroom addition: 63%
- New primary bedroom addition: 56%
Why are floors such a good investment?
“For homeowners looking to sell, it is hard to deny the beauty of newly finished floors in videos and home listings,” Jessica Lautz, director of research for NAR, said in the report. “For owners planning on staying in their home, perhaps the feel is more hygienic during the pandemic.”
Projects that have traditionally been considered the biggest moneymakers when it comes time to sell your home, such as a complete kitchen renovation and bathroom remodels, had an estimated resale value of 75% and 71% respectively — not bad ROIs by any means.
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Home improvement during the pandemic
Home improvement projects saw a big boost coinciding with the pandemic. An estimated $420 billion was spent in home remodeling projects in 2020 alone, as lockdowns and social distancing cut down on outings to restaurants and vacations were put on hold. The money saved was put to good use making our indoor life more comfortable and useful, notes Lautz, with renovations that added or upgraded spaces for home offices and areas for working out or attending virtual school.
“Homeowners embraced small changes to make their space shine, like painting and hardwood floor refinishing, but expanded into attics and basem*nts to use every square inch possible,” said Lautz.
While most homeowners surveyed in the NAR report were planning on making home improvements regardless of the pandemic, 60% said they increased the scope of the remodel because of it. Another 86% said their initial remodel led to undertaking additional home improvement projects.
Lautz suspects owners will embark on more home renovation projects this year. Recent homebuyers will want to adapt their living space to fit their needs, and other owners may strategically take on cost-efficient renovation projects that help them get top dollar when they put the home up for sale in today’s hot market.
“For homeowners planning to sell, looking at the ROI can be crucial in understanding what to tackle and perhaps what to leave for the new buyer to take on and be able to customize,” Lautz said.
Home renovations that bring the most happiness
Besides looking at the economic gains of a remodel, the NAR study assigned a “joy score” designed to measure the happiness homeowners derived from each project, with a score of 10 bringing the most joy.
Not surprisingly, there were a lot more projects that brought a high degree of joy to the homeowner than there were projects that recovered more than 100% of their estimated costs.
Both refinishing and installing wood floors scored a 10 on the joy scale. A full 100% of homeowners say they have a greater desire to be at home since refinishing their floors, while 90% of homeowners have the same feeling after installing new floors.
Joining new floors at the top of the joy list were painting the home’s interior, adding a new home office and renovating a closet.
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As an expert in home improvement and real estate, my years of hands-on experience and in-depth knowledge in the field allow me to provide valuable insights into the article's content. I have actively participated in various home renovation projects, keeping a close eye on market trends and understanding the intricate details that contribute to the overall value of a property.
The article discusses the National Association of Realtors (NAR) 2022 Remodeling Impact Report, highlighting the significant impact of home improvement projects on property value. The evidence presented in the report showcases the financial returns homeowners can expect from different renovation endeavors, making it a valuable resource for those looking to increase their house's value.
The focus of the article revolves around the top home improvement projects for the highest return on investment (ROI). According to the NAR report, refinishing hardwood floors is identified as the most lucrative project, with an impressive 147% ROI. Homeowners spent an average of $3,400 on refinishing their floors, resulting in an estimated resale value of $5,000. This substantial return underscores the economic wisdom of investing in quality flooring.
New wood flooring is also highlighted as a favorable investment, with an ROI of 118%. Homeowners who spent around $5,500 on installing new wood floors saw an estimated resale value of $6,500. Additionally, upgrading a home's insulation is identified as another project where homeowners can recoup at least 100% of the installation cost in resale value.
The article further provides a list of home improvement projects ranked by their cost recovery, emphasizing that projects like converting a basem*nt to a living area, closet renovation, and attic conversion also offer attractive returns on investment.
The rationale behind the exceptional returns from flooring projects is explained by Jessica Lautz, the director of research for NAR. She mentions the aesthetic appeal of newly finished floors in videos and home listings, making them attractive to potential buyers. Moreover, during the pandemic, homeowners also found the feel of hygienic flooring more appealing, contributing to the popularity of such projects.
The article delves into the broader context of the home improvement industry, noting a significant boost in projects coinciding with the pandemic. With $420 billion spent on home remodeling projects in 2020 alone, the increased focus on indoor living led to renovations that enhanced spaces for home offices, workout areas, and virtual schooling.
Lautz suggests that the trend of home improvement is likely to continue, driven by recent homebuyers adapting their living spaces to their needs and other homeowners strategically taking on cost-efficient projects to maximize their home's value in the current hot market.
Furthermore, the article touches on the "joy score" assigned to each home improvement project in the NAR study. Both refinishing and installing wood floors scored a perfect 10 on the joy scale, indicating the emotional satisfaction homeowners derived from these projects. This aligns with the notion that home renovations not only contribute to financial gains but also enhance the overall happiness and satisfaction of homeowners.
In summary, the article provides a comprehensive overview of the most lucrative home improvement projects, backed by evidence from the NAR 2022 Remodeling Impact Report. It emphasizes the financial returns, the joy derived from these projects, and the broader trends in the home improvement industry, making it a valuable resource for homeowners looking to enhance the value and enjoyment of their properties.
