Home Renovations That Boost its Value

Homeowners have plenty of motivation for making home renovations and improvements. The real estate market is red hot in many places around the country. Market conditions are pushing up prices and increasing equity, which increases the enticement and ability to fund makeovers. Rising home prices make it a good idea to keep your NJ Home Insurance current with your updated values.

The lure of endless renovation and design shows on TV and the internet fuels the growing desire to upgrade our homes. Who doesn’t want a free-standing soaking tub, a walk-in shower, and upgraded kitchen cabinets, countertops, and appliances? And those are just a start.

Most websites with advice on home renovations that increase the value of the home focus on lists of upgrade options that statistically give the best return on investment (ROI.) While such information is need-to-know, it’s not helpful without perspective. To get the best possible ROI, you must make informed decisions.  

Think About It for a Rationale Approach and Best Outcome

Before being swept away with grand plans to redo your digs, it’s advisable to answer these questions.

• Why are you making the changes?
• How long do you plan to stay in your home after the renovation?
• What is the current market value for homes of your size in your neighborhood?
• Where does the value of your home rank in comps for your market?

Investing for Personal Satisfaction

Homeowners with deep roots in the community and current abode are in the best position to make improvements that don’t likely offer the same ROI as the most popular upgrades. If your intention for spending is to improve your lifestyle rather than ROI, your range of options is much better than those seeking quick financial recovery of their home improvement costs. 

In most locales, putting in an inground pool surrounded by lush landscaping brings instant lifestyle upgrades, but both are investments that are hard to recoup when you sell. A rule of thumb says, “Don’t make improvements that don’t give a decent or better ROI unless you plan to live in the home and enjoy it for five or more years.”  

No matter your reasons for making renovations, be prepared to know all upgrades don’t add value equally. Although improving for lifestyle offers the most comprehensive array of choices, it is still advisable to understand the recovery value of your upgrades.

Investing for ROI

If your primary intention for your renovations plans is to boost resale value, it’s crucial to know the comps in your area and where your current home value fits into the equation. That’s because if your home price is already at or near the top in the market, you’ll have less upside potential to make your home improvement investments give you a reasonable chance to recoup your outlay. 

Typically, buyers will not pay extra for homes with above-market prices because of recent upgrades. And lenders usually are not eager to include improvements to their evaluations for homes priced at the top end of the comp range. If homes in your neighborhood are regularly selling for over asking prices and seeing multiple competing bids, the influence of current improvement value lessens significantly. In such cases, your location drives market value.

Show Me the Money

The 2019 Remodeling Impact Report report from REALTOR® magazine offers helpful insights. 

It ranks projects’ appeal to buyers (highest to lowest) in side-by-side comparison next to projects’ potential value to the home for resale (highest to lowest). The top three results are the same on both lists; they vary slightly after that:

1. Complete Kitchen Renovation
2. Kitchen Upgrade
3. HVAC Replacement

The Remodeling Online 2020 Cost Vs. Value Report compares average costs for 22 remodeling projects with the value those projects retain at resale in 101 US markets. Here are the top seven projects ranked by the greatest ROI:  

• Manufactured Stone Veneer              95.6%  
• Garage Door Replacement                94.5%  
• Minor Kitchen Remodel                      77.6%  
• Siding Replacement | Fiber-Cement  77.6%  
• Siding Replacement | Vinyl                74.7%  
• Window Replacement | Vinyl             72.3%  
• Deck Addition | Wood                         72.1%  

You can see from the differences in the above reports that you need to research your situation to make wise decisions that will give you the best payback for your home improvement projects. Other factors to consider are driven mainly by the pandemic: the costs of goods, the shortage of goods, and the availability of qualified workers. Any of them can wreck plans and skew future results. 

If you pay a 20% pandemic penalty that inflates prices temporarily, it makes getting your ROI more challenging. No one knows, but the supply chains and worker pools may revert to the norm and lower prices in the future. It’s not a guarantee but something to consider. If you are not in a hurry, it might be a safer bet to wait it out. If you need to make changes now, be prudent in your decisions to safeguard your ROI. 

Whatever the changes you make to your home, it’s sound advice to review your NJ Home Insurance policy to keep your most valuable investment fully protected. Our staff will work with you to tailor the most effective policy that matches your distinct coverage and lifestyle needs. 

About Dickstein Associates Agency

Dickstein Associates Agency has distinguished itself as a leading provider of personal and business insurance in the tri-state area for over 55 years. We pride ourselves on being advocates for our clients and providing them with quality and affordable coverages. As Trusted Choice™ independent insurance agency, we partner with various national and regional carriers, allowing for flexible and unbiased coverage for each client’s unique circumstances. For more information on how you can leverage all of your insurance to work best for you, and how we can secure the best insurance in the marketplace based on your specific needs and business objectives, contact us today at (800) 862-6662.