Home improvement value is all about location
Finishing a basement is a great example of how your location impacts the value of a home improvement project. In Portland, finishing a basement adds a lot more to your resale value than in any other market. This is a unique quirk in the Portland market where there happens to be strong demand for extra basement space, much more than say Dallas or Atlanta.
There are more obvious regional trends like adding a pool in Phoenix, Tampa, and Las Vegas versus Minneapolis, but check out adding a full bathroom in the Southeast, and maybe think carefully before remodeling your kitchen in those same markets.
The map below shows how the value added by a home improvement project varies based on the location.
How to choose home improvements with the best ROI
Using our home improvement calculator to estimate how much value a project adds before you take on a big project, can make it easier to negotiate with contractors, as well as understand whether or not it pays to invest your time and money.
It’s important to remember that “adding value” is not the same as return on investment (ROI), which is the amount of money you pocket after all of your costs. Understanding how much a project could potentially add to your home’s resale value is the first step in determining whether or not the investment will pay off. The second step is understanding the costs.
For example, in Phoenix a kitchen remodel can add $23,000 to your home’s value, but the median cost of renovating a kitchen is about $15,000, according to the most recent American Housing Survey. Local costs will vary, but in this example the return on remodeling a kitchen in Phoenix would be estimated at just over $8,000.
How to calculate the ROI for a kitchen remodel
|Home value before remodel||$200,000|
|Home value after remodel||$223,000 (+$23,000)|
|Cost of remodeling a kitchen||-$15,000|
|Return on Investment (ROI)||$8,000 (+53%)|
Even if the ROI of a project is negative—as it might be for more expensive homes—you’ll also want to consider how much you’ll enjoy the upgrade yourself. While some homeowners want to maximize ROI, others may prefer to increase the quality of life in their home while still increasing their home’s value.