Rick BissonDrive up and down the streets of any neighborhood and each individual homeowner’s pride of ownership reveals itself in various ways. In many cases, a home’s curb appeal is a quick snapshot of what lies beyond the passerby’s view. Regardless of what end of the spectrum a home falls on – from snappy and pristine to dull and dingy – most homeowners have a list of home improvement projects either written down or filed away in a mental note.

With a list in hand, or in mind, the next natural step is to prioritize the projects. Here is where budgets, wants, and desires start to vie for “pick me” status. One way to help prioritize the list is to consider the return on investment (ROI) of each project. This is especially helpful when considering how a project, or projects, will impact the current and future market value of the home.

Fortunately, each year studies are conducted to analyze the cost for various upgrades and how much will be recouped on that investment when the home is sold. One such report is Remodeling Magazine’s Cost vs. Value report.

Results reported in the Cost vs. Value report are produced by researchers scrutinizing 29 popular home improvements in 99 markets nationwide. They poll contractors on how much they charge for these jobs as well as real estate agents who share how much they think these improvements increase a home’s market price. Next, each project’s upfront cost is divided by the home’s resale value. The resulting percentage offers some guidance as to how well the money invested in each particular renovation project pays off.

Comments from Craig Webb, editor of Remodeling Magazine, point out that the value of pricier projects rose significantly over last year. These results may come from the health of the housing market. “When the market is hot, Realtors are more likely to give value to more expensive renovation projects, because they expect that the market will stay hot and people will pay the price,” he explains. “When the market is cool, Realtors tend to put less value on those big-dollar projects, because they have concerns about whether the house will get sold in any state.”

Despite the uptick in value associated with pricey renovation projects in the 2017 report, once again the highest ROI projects came with the cheapest cost to complete. This year (same as last year), the number one finisher was installing loose-fill fiberglass insulation in the attic. Hidden away and silently doing it’s job, according to Remodeling Magazine, with an ROI of 107.7 percent, insulating the attic is the only project that regularly pays back more than the dollars invested.

Number two on the ROI list is replacing an ordinary, run-of-the-mill entry door with an attractive steel replacement door at 90.7 percent, third at 89.4 percent was adding manufactured stone veneer.

Data from the 2017 report suggest that “curb appeal” projects such as new doors and exterior siding generate higher returns than improvements completed to a home’s interior.

Reviewing the individual ROI on all 29 projects analyzed in the Cost vs. Value report, it’s clear that most renovations won’t pay them back in full. On average, in 2017, homeowners can expect to get back 64 percent of every dollar spent on home improvements.

It’s also apparent from the data that tastes vary widely by geographic location. For this reason, Remodeling Magazine breaks down its data into nine U.S. regions and then further down into the major metropolitan cities of each state. In Portland, Maine for example, replacing an old entry door with a new fiberglass door earned the highest ROI at 93.7 percent. Next at 91.4 percent was siding replacement, followed by garage door replacement at 85.8 percent.

Wondering what improvements, if any, should be made to your house? Craig Webb says, “If you see yourself keeping the house for at least five years, you shouldn’t worry about value at all.” Housing trends can change dramatically in this amount of time, so what’s hot or popular today could be outdated in the near future. Renovate however will make you happy.

However, if you’re planning to sell in less than five years, “then looking at the return makes sense,” says Webb. Be sure to do your research. Remember, tastes vary widely by location.
If you, or someone you know, has a project list for their home, refer to Remodeling Magazine’s Cost vs. Value report for guidance and be sure to consult with your local trusted Realtor.

This column is produced by Rick Bisson and his family, who own Bisson Real Estate with Keller Williams Realty of Midcoast and Sugarloaf.