Bigger and more expensive projects, rising new-home prices, curb appeal, and energy efficiency all contributed to a slight gain in remodeling projects’ payback at resale, the 2016 Cost vs. Value report shows.
The average cost and average return at resale for the 30 projects in this year’s report resulted in an average of 64.4% of a project’s investment dollars getting recouped if the home is sold within a year. That’s up from 62% in the 2015 report and the second-highest return in the past eight years.
This year’s 64.4% deserves an asterisk because the 2016 report eliminates eight projects from last year, including some with the weakest returns, while adding two projects, one of which—attic insulation—topped the list. But if you look only at the 17 projects we’ve tracked since 2005, the results are similar.
For those 17, the average value recouped was 63.7%, up from 62.1% in the 2015 report and the second-best year in the past six. When you look at cost alone, regardless of whether you’re talking about the 17 perennials or all 28 projects that were in the 2015 and 2016 reports, the result was the same: The average project cost 4.7% more this year. But when you ask real estate professionals for their view of how much that project boosted a home’s value at resale within a year, the results varied according to which projects you included. For the 28 jobs tracked both years, real estate professionals estimated the average project’s dollar return was 6.7% higher in the latest report than in 2015. For just the 17 perennials, the gain in value was 7.3%.