People are often curious about how certain home improvements are going to affect the value of their homes. The chart of percentages displayed here is intended to give the homeowner a very general idea of the potential that certain improvements have in adding value to your home. Listed below are some other factors that also play a part in the market's willingness to pay for the improvement you are considering.
When determining the actual value of any home improvement, consider this question. Would a typical purchaser of this type of home complete this improvement upon buying my property if it did not already exist? If the answer is yes, then the improvement you are considering is likely to return it’s full cost or possibly even more in added value to the property. If the answer is clearly no, then you are more likely to experience only a minimal increase in your property's value as a result of the improvement.
Additionally, it’s wise to consider the typical buyer’s ability and desire to pay for the feature you are considering. I’m referring to a typical buyer for a home in the same price range as yours. Let me give you an example. Let’s assume that you are considering adding a sun room to the back of your home. Of course, no sun room would be complete without a hot tub. Total cost, $30,000.00. It probably won’t take a rocket scientist to conclude that this would be an extremely bad investment for re-sale if you live in an 800 square foot bungalow in a low to middle-income neighborhood. On the other hand, if you own a two thousand square foot home in a middle to high-income area, such an improvement might prove very appealing to future potential purchasers of your home and return a significantly higher amount of the dollars invested upon re-sale.
Most improvements will never return their full cost in added value. Let’s look at the sun room again. While the homeowner with the larger home in the more expensive area can almost certainly expect to recover a greater percentage of the improvement’s cost they will not likely recover it all. Looking back at the first issue raised in this article, it’s doubtful that a “typical purchaser,” even of a home of this quality, would run right out and install a sun room upon purchasing the home if it didn’t already exist. Quite simply, a sun room is not a typical improvement in any type of home, therefore, it would not be a tremendous investment for re-sale in any home. Of course, there is nothing wrong with completing an improvement that will not deliver a great re-sale return if such a feature would improve your enjoyment of your home while you live there and you can afford to complete it. It's reasonable to expect that we will absorb some cost for improvements which we will use and enjoy while we occupy the home. It just so happens that my current home has a sun room with a hot tub. It has become my very favourite room and I am particularly pleased that the previous owner absorbed about half of its actual cost.
| Interior paint |
70% to 300% |
| Exterior paint |
70% to 300% |
| Floor coverings |
50% to 300% |
| Kitchen renovation |
75% |
| Bathroom renovation |
75% |
| Bathroom addition |
75% - 100% |
| Addition to existing home |
50% to 75% |
| Basement development |
65% |
| Landscape improvements |
50% |
| Underground sprinklers |
50% |
| Patio or deck |
50% |
| New windows |
50% |
| New exterior finish |
70% |
| New heating system |
50% to %70% |
| Central air conditioning |
50% |
| Built-in dishwasher |
80% |
| Fireplace |
65% |
| Central vacuum system |
65% |
| Water softener |
35% |
| Energy efficiency features |
50% |
| Swimming pool |
(25%) to 50% |
| Garage |
75% to 100% |
It should be noted that the potential return on investment for these features would be determined by the actual need for such an improvement in the subject property. For example, new flooring will add more value to a home that presently has badly worn or dated flooring. If you are simply replacing it because you don’t care for the colour the return will be minimized. These noted improvements are often worth completing for re-sale. A freshly decorated home will sell much faster than one that is dated and showing excessive wear. Additionally, certain features may add more value in some geographic areas. For example, a swimming pool delivers a small return (or even a potentially negative return) in Saskatoon where the swimming season is short. In Arizona, a pool would clearly deliver a better return. |