Home improvement: what’s most valuable for resale? Exterior renovations, like siding replacements, recoup a higher percentage of homeowner costs.

Did our last post on kitchen trends get you thinking about renovation projects for your home?

Homeowners who are planning to make home improvements this year will want to want to consider how much their investment will improve their home’s resale value.

Gains in renovation and repair spending to owner-occupied homes in the U.S. will shrink from 7.5 percent in 2018 to 5.1 percent in 2019, according to the Leading Indicator of Remodeling Activity (LIRA) released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.

“Slowing house price appreciation, flat home sales activity, and rising mortgage interest rates are deflating owners’ interest in making major investments in home improvements this year,” says Chris Herbert, Managing Director of the Joint Center for Housing Studies. “Continued slowdowns in homebuilding, sales of building materials, and remodeling permits all point to a more challenging environment for home remodeling in 2019.”

Which Renovation Projects Have the Highest Return on Investment?

“Despite the growing headwinds, improvement and repair spending is still set to expand this year to over $350 billion,” says Abbe Will, Associate Project Director in the Remodeling Futures Program at the Joint Center. “But after several years of stronger-than-average increases, the pace of growth in remodeling activity is expected to fall back to the market’s historical average of 5.2 percent.”

Insights from the 2019 Cost vs. Value Report by REMODELING Magazine point to new renovation trends and rank projects that recoup the highest and lowest percentage of costs.

New Renovation Projects Included in 2019’s Cost vs. Value

There are two new projects in this year’s Cost vs. Value report. The first is a roofing replacement job that adds standing-seam metal roofing. It costs significantly more than asphalt shingles but has greater durability and the fade- and chalk-resistance warranties are often triple the algae- and streak resistance warranties on even high-end asphalt shingles.

An updated universal bathroom design (first introduced to Cost vs. Value in 2017) is the second new project in this year’s report. Designers argued features in a universal design bathroom—like tiled walls and shower, humidity controlled ventilation and radiant-heat floors—are more consistent with an upscale project than the previous specs allowed. Based on that feedback REMODELING Magazine revamped their Cost vs. Value assessment to include a higher price tag for universal bathroom design.

2019 Cost vs. Value Report: It’s All About “Curb Appeal” and “First Impressions”

Exterior replacement projects dominated the top ten high return projects for 2019. Garage door replacements recouped the highest percentage of project costs (97.5%) with manufactured stone veneer in a close second (94.9%). Mid-range minor kitchen remodels (80.5%), wood deck additions (75.6%) and siding replacements (75.6%) rounded out the top five. Steel entry door replacements (74.9%), vinyl window replacements (73.4%), fiberglass grand entrances (71.9%), wood window replacements (70.8%) and composite deck additions (69.1%) also recouped a high percentage of project costs.

Upscale master suite additions (50.4%), midrange backyard patios (55.2%), upscale bathroom additions (58.1%), midrange master suite additions (59.4%) and major kitchen remodels (59.7%) recouped the lowest percentage of project costs.

“With the increasing costs of building materials and labor, we urge remodelers to think like real-estate professionals first,” said Clayton DeKorne, Editor-in-Chief of REMODELING Magazine. He added, “When you adjust your focus to think like a broker first, you can dull clients’ number one pain point – cost – with a discussion of the amount that can be recouped, then go on to show them how to think like a remodeler by raising their understanding and appreciation of the total value, not just resale value, of a home.”