Before you decide to tackle a home improvement or remodeling project, consider which projects provide the most value for the amount of money you are investing.
Each year, Remodeling magazine compiles the Remodeling Cost vs. Value Report, which cites the average costs of over 20 home improvement and renovation projects in nine U.S. regions.
The report provides the average cost of each project (including labor and materials) and the projected value it adds to your home. It also shows the percentage of costs you can expect to recover if you sell within a few years of the improvement.
Understanding the return on investment data can help you choose remodeling projects that provide financial value in addition to lifestyle benefits you’ll enjoy while living in the home. Focus on renovations that recoup a high percentage of return if you plan to sell soon after completing improvements.
Below we’ll outline the top five improvements that will give you the best return on your investment.
Projects With the Highest Return on Investment for 2023
The five projects we discuss below provide a full return on initial investment, with the exception of installing vinyl siding, which provides slightly less than a full return. You can move forward with confidence on these home improvement projects knowing you won’t lose money if you decide to sell shortly after completing them.
You’ll find complete data on the five projects and more in the Remodeling Cost vs. Value Report.
HVAC Conversion
Converting from a fossil-fuel furnace to an electric heat pump for heating and cooling a 2,000-square-foot home provides the highest return. This project involves removing the existing furnace and ductwork and installing new electrical wiring and an inverter heat pump with indoor wall units. The project costs an average of $17,747 and returns 103.5% of the investment upon resale.
Installing a heat pump system powered by renewable energy eliminates fossil fuel use and combustion emissions, creating climate and health benefits.
While up-front costs of this HVAC replacement are high, rebates and tax credits can reduce them. Operational savings from superior efficiency compared to furnaces also help offset the initial expenditure over time.
Garage Door Replacement
Removing an existing 16’ x 7’ garage door and installing a new four-section garage door and tracks using the existing motorized opener provides an excellent return on investment. The project costs an average of $4,302 and returns 102.7% of the investment upon resale.
The garage door is a focal point of a home’s exterior. A modern glass panel or carriage-style garage door can significantly boost curb appeal.
Compared to old worn doors, new garage doors also provide better insulation, reduce noise, and increase security.
Manufactured Stone Veneer
Removing 300 square feet of vinyl siding from the bottom third of a house and replacing it with manufactured stone veneer also provides a nice return on investment. The project costs an average of $10,925 and returns 102.3% of the investment upon resale.
Manufactured stone veneer (faux stone siding) replicates the texture and appearance of real stacked stone. When installed on exterior walls, it adds instant curb appeal and character. Labor and material costs depend on the amount of existing siding removed and whether new flashing is required. Since installation affects only the exterior, it causes minimal disruption during the renovation.
Focus on improving the most visible areas of the home, like the front facade or entryway sides, and limit the veneer to the bottom third of the home. Opt for neutral, natural stone colors that complement the existing color scheme.
Entry Door Replacement
Replace an existing entry door with a factory-finished steel one for improved style and durability and a full rate of return. The project costs an average of $2,214 — lower than the cost of replacing with a wood door — and returns 100.9% of your investment.
Entry doors are one of your home’s key focal points. You can substantially boost your home’s curb appeal with minimal effort by swapping out your current entry door for a new steel one with modern styling and energy efficiency. Factors like material, size, design, and upgrades (sidelights, transom windows) add to the total project cost but bring benefits like increased natural light.
New entry door Installation takes one to three days with minimal disruption.
Vinyl Siding Installation
Replacing 1,250 square feet of existing siding with vinyl siding instantly updates your home’s appearance, and vinyl siding is low maintenance and durable. The project costs an average of $16,348 and returns 94.7% of your investment on resale.
Over time, a home’s exterior siding is damaged by weather, pests, and temperature changes. Compared to wood or cement siding, vinyl resists moisture, temperature changes, and termites.
The installation timeline for vinyl siding ranges from two days to one week, depending on the size and complexity of the area to be sided.
So, Is It Worthwhile to Invest in Home Improvement Projects That May Not Fully Recoup Costs When You Sell?
While return on investment is an important consideration, home improvement projects also aim to improve your quality of life while you live in your home. But If you’re working with a tight budget and want to maximize the return on your investment, concentrate on renovations that future buyers are likely to value when it’s time to sell.
Garage door, entry door, and stone veneer improvements boost your home’s aesthetics and curb appeal. These projects pay for themselves upon resale, add value, and make your home more attractive to buyers. And if you don’t sell, you’ll enjoy the lasting benefits of your improved home for years to come.
FAQs About Home Improvement Return on Investment
How accurate are the projected returns on investment for home improvements?
The resale value data was aggregated from estimates provided through a survey conducted by Zonda of over 6,000 Realtors. The data provides a reasonable ballpark of resale value, but many factors impact exact returns.
How do I determine the costs for home improvement projects?
Costs vary based on project complexity, materials, size, geographical region, and more. Get multiple bids from contractors to compare pricing for your specific project.
Should I only do projects that recoup 90% to 100% of my investment?
Return on investment is an important factor but not the only one. You should prioritize renovations that improve your quality of life and functionality of your home based on your budget, occupancy timeline, and lifestyle.
Should I take out a home equity loan to fund renovations?
Home equity loans allow you to borrow against your home’s equity for improvements. Increased debt cuts into profit from selling your home, so consider your finances, equity, and expected rate of return before taking on a loan.
How long should I live in my home after renovations to reap maximum return?
It’s recommended you stay at least two years after completing renovations to realize maximum resale value. Your timeline should depend on factors like costs, targeted profit, and real estate market conditions.