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Mortgage rates are expected to rise over the coming years, and inventory woes are still plaguing many parts of the country. As a result, the remodeling industry is expecting a busy few years ahead as more people stay in their current homes and renovate. But, for homeowners who are thinking about selling in the future, not all renovations are created equal. Remodeling magazine's Cost vs. Value Report analyzes the returns on investment for 29 remodeling projects to determine which ones are worth the money and which ones will prove costly for homeowners. Here are the top five smart renovations for 2017:
Staying Warm
For the second year in a row, only one project saw a return on investment that was higher than its initial cost: installing fiberglass attic insulation. With installation costing on average $1343, homeowners could expect to recoup $1446 at resale, a return on investment (ROI) of 107.7 percent. Many home buyers are wary of high electricity bills; renovations that boost the energy efficiency of a home are a smart investment.
It's What's on the Outside That Counts . . .
Improving curb appeal continues to be one of the best decisions homeowners can make. Three exterior projects made the top five on the Cost vs. Value Report: Installing a new steel entry door came in at number two on the list, recouping 90.7 percent of its initial cost. Replacing worn-out siding with manufactured stone veneer saw a return on investment of 89.4 percent, making it the third most cost-effective renovation. And a garage door replacement came in at number five in the report; this modest investment will give homeowners a 76.9 percent return on investment. Many exterior projects that boost curb appeal are also cost-efficient: replacing an entry door costs only $1413, while switching out a garage door comes in around $1749. Being budget-friendly helped boost these projects' cost-recouped scores.
Not What's on the Inside
Only one remodeling project made it into the top five: a minor kitchen remodel with an average job cost of $20,830. On resale this project will recoup 80.2 percent for homeowners. If kitchens and bathrooms are supposed to sell homes, how come these types of renovations didn't score higher in the report? Real estate professionals believe boosting a home's curb appeal makes more of an impression than renovating the interior. Exterior projects gave homeowners an average ROI of 74.9 percent; homeowners who renovated the interior of their home only saw a payback of 63.5 percent. What's more, boosting a home's curb appeal is often a simpler job than renovating a kitchen. Straightforward jobs, like replacing a window or a door, often cost less, which translates into a higher ROI. Kitchen and bathroom remodels, meanwhile, require many different trades—and all of those skilled tradespeople come at a cost, resulting in a lower ROI. In addition, exterior projects tend to be more neutral in style than kitchens and bathrooms. Taste is subjective; a home buyer might not like your new modern kitchen, but they will find it hard to fault a new steel entry door. If you're thinking of selling your home in the next few years, focus on improving the exterior of your home, and keep your kitchen renovation budget for your new home.
