Business

Remodeling’s Cost and Value on the Rise

Updated research from REALTORS and NARI offers new payback benchmarks for 12 interior and eight exterior remodels.

authors Qr Staff   | September 28, 2017

WASHINGTON, D.C.—Homeowners who take on remodeling projects gain not only equity and more resale value in their home, but they are also more likely to find satisfaction and enjoyment from their home, according to a new report from the National Association of Realtors (NAR) and with help from the National Association of the Remodeling Industry (NARI).

The 2017 Remodeling Impact Report—the second of its kind from NAR—surveyed Realtors, consumers who have completed remodeling projects and members of NARI.

The report reveals top remodeling projects, as well as the increased value, financially and emotionally, that 20 specific projects bring to homeowners once completed.

2017 Remodeling Impact Report Results

Remodeling Project NARI Cost Median NAR Value Median NAR Percent of
Cost Median (C/B)
New Roofing $7,500 $8,150 109%
Hardwood Flooring Refinish $3,000 $3,000 100%
Insulation Upgrade $2,100 $1,600 76%
New Wood Flooring $5,500 $5,000 91%
New Garage Door $2,300 $2,000 87%
New Vinyl Siding $13,350 $10,000 75%
New Vinyl Windows $18,975 $15,000 79%
New Fiber Cement Siding $18,000 $15,000 83%
New Steel Front Door $2,000 $1,500 75%
HVAC Replacement $7,475 $5,000 67%
Basement Conversion $40,000 $25,000 63%
Kitchen Upgrade $35,000 $20,000 57%
Complete Kitchen Renovation $65,000 $40,000 62%
Attic Conversion to Living Area $75,000 $40,000 53%
New Fiberglass Front Door $2,700 $1,800 67%
Bathroom Renovation $30,000 $15,000 50%
New Wood Windows $35,000 $20,000 57%
Closet Renovation $3,750 $2,000 53%
New Master Suite $125,000 $65,000 52%
Add New Bathroom $59,000 $29,750 50%

After completing a remodeling project, 75 percent of owners have a greater desire to be in their home, 65 percent say they have increased enjoyment in their home, and 77 percent feel a major sense of accomplishment when thinking of their completed project. Fifty-six percent felt happy when they see their completed projects, and 39 percent say they feel satisfied.

“No matter the objectives, Realtors have unique and invaluable insights into how renovations and remodeling will bring the most benefit to homeowners,” says NAR President William E. Brown, a realtor from Alamo, California, and founder of Investment Properties. “They also understand that many of these projects are undertaken solely to get more enjoyment from spending time at home.”

Interior Projects

For owners looking to sell their home, complete kitchen renovations, kitchen upgrades, bathroom renovations and new wood flooring as the interior projects that most appeal to potential buyers. Interior projects that yield the largest financial return upon resale are hardwood floor refinishing (recovers 100 percent of project costs upon resale), new wood flooring (91 percent of costs recovered) and insulation upgrades (76 percent of costs recovered). Bathroom renovations and adding a new bathroom yielded the smallest financial return upon resale, recouping approximately 50 percent of project costs.

Exterior Projects

When it comes to exterior projects, new roofing will recover 109 percent of costs upon resale—more than any other project in the report. New roofing was also the exterior project that most appeals to buyers, followed by new vinyl windows, a new garage door and new vinyl siding.

When it comes to the enjoyment homeowners gain from these projects, several projects received a perfect “Joy Score” of 10; Joy Scores range from 1 and 10, and higher figures indicate greater joy from the project. Projects with a perfect Joy Score of 10 included both interior and exterior project of all price ranges, such as a new master/owner’s suite with an estimated cost of $125,000 for a full makeover and new steel front doors with an estimated cost of $2,000.

Many homeowners find the idea of attempting a remodeling project too overwhelming to take on. Thirty-five percent of homeowners in the U.S. said they would rather move than remodel their current home. Owners in urban areas are the least likely to take on a project, with only 52 percent saying they would be willing to remodel their home, compared to 55 percent in suburban areas and 70 percent for owners in rural areas.

“Even though a remodeling project may seem overwhelming at the onset, working with a qualified remodeler who has the required experience and training can make a big difference,” says NARI President Tom Miller, MCR, CKBR, and owner of Tom Miller Remodeling, Inc. in Portland, Oregon. “This year’s report confirms how remodeling can increase home value and day-to-day enjoyment. I can’t emphasize enough how important it is to work with a contractor you can trust who adheres to a strict code of ethics and can help define a realistic budget. Get the project done right with a NARI member contractor.”

A full analysis of the new NAR report will appear in the October issue of Qualified Remodeler magazine. |QR

National Association of REALTORS Research Department
Though the Joy Score for a consumer has increased to 10 (compared to 9.7 in 2015), the NARI Remodelers' cost estimate increased from $112,500 reported in 2015 to $125,000 in 2017.

National Association of REALTORS® Research Department
The NARI Remodelers' cost estimate for a kitchen upgrade increased $5,000 from 2015, but the REALTORS estimated cost recovered remained the same year-over-year, resulting in a lower percent of value recovered for the project. However, the Joy Score remains fairly high at 9.6 in 2017.

National Association of REALTORS® Research Department
Resulting in a Joy Score of 10, a complete kitchen renovation, similarly, saw a slight increase in the cost estimate from 2015 while the REALTORS estimated cost recovered remained the same in 2017.

National Association of REALTORS® Research Department
In 2015, a bathroom renovation was estimated at $26,000 by NARI Remodelers. In 2017, the cost increased slightly, and now the percent of value recovered is a reported 50 percent. The Joy Score is 9.6, compared to 9.3 in 2015.

National Association of REALTORS® Research Department
The REALTORS' estimated cost recovered increased to $29,750 in 2017, compared to $26,000 reported in 2015. The Joy Score remains consistent year-over-year at 10.

National Association of REALTORS® Research Department
Reporting a 63 percent of value recovered, a basement conversion to living area lists the same REALTORS estimated cost recovered year-over-year: $25,000. The project has a Joy Score of 9.5.

National Association of REALTORS® Research Department
In 2015, the NARI cost estimate was $65,000 for an attic to living area conversion versus $75,000 reported in 2017. Because the cost recovered remained consistent at $40,000, the percent of value recovered decreased to 53 percent in 2017.

National Association of REALTORS® Research Department
While an insulation upgrade does not have the highest Joy Score—registering an 8.5—NARI Remodelers' cost estimate remained the same in 2017 as it was in 2015: $2,100.

National Association of REALTORS® Research Department
A closet renovation has a Joy Score of 10. The project increased slightly in its cost estimate from NARI, going from $3,500 in 2015 to $3,750 in 2017.

National Association of REALTORS® Research Department
New wood flooring is one of the few projects to report the same cost estimate and cost recovered from 2015 to 2017. However, it's Joy Score decreased slightly from 9.5 in 2015 to 9.2 in 2017.

National Association of REALTORS® Research Department
Also remaining consistent from 2015 to 2017, refinishing hardwood floors records a 100 percent value recovered, and both NARI Remodeler's cost estimate and REALTORS estimated cost recovered increased $500 from 2015.

National Association of REALTORS® Research Department
The Joy Score for an HVAC replacement increased fairly significantly from 2015 to 2017, recording Joy Scores of 8.6 and 9.1, respectively. The NARI Remodelers' cost estimate reports a $475 increase from 2015 figures.

National Association of REALTORS® Research Department
Adding a new steel front door is another project that remained consistent from 2015 to 2017, listing the same figures for both the cost estimate and estimated cost recovered. The Joy Score increased from 9.7 in 2015 to 10 in 2017.

National Association of REALTORS® Research Department
A new fiberglass front door saw a 7 percent increase in value recovery in 2017, increasing to 67 percent. The REALTORS estimated cost recovered increased $300 to $1,800 reported in 2017. The project has a Joy Score of 10.

National Association of REALTORS® Research Department
The numbers for adding a new garage door remained consistent between 2015 and 2017. The value recovered stayed 87 percent, while the Joy Score showed a minor change to 9.4 (instead of 9.5 in 2015).

National Association of REALTORS® Research Department
New vinyl siding saw a fairly significant increase in Joy Score, increasing from 8.9 in 2015 to 9.6 in 2017. Similarly, the NARI Remodelers' cost estimate increased from $12,000 in 2015 to the $13,350 reported in 2017.

National Association of REALTORS® Research Department
This is one of the few projects where the NARI Remodelers' cost estimate decreased. Fiber cement siding came in at $19,100 in 2015 vs. $18,000 in 2017, resulting in a higher percent of value recovered. The Joy Score remained 10.

National Association of REALTORS® Research Department
A new roof resulted in the highest value recovered of all 20 projects examined, registering 109 percent. The REALTORS estimated cost recovered increased to $8,150 in 2017, compared to $8,000 in 2015. It has a Joy Score of 9.2.

National Association of REALTORS® Research Department
While the value recovered remained fairly consistent, both the NARI Remodelers' cost estimate and REALTORS estimated cost recovered saw increases of $300 or more in 2017, compared to the 2015 figures.

National Association of REALTORS® Research Department
Adding new wood windows saw a fairly significant increase in costs, though the value recovered remained comparable. In 2015, the NARI cost estimate was $26,000, while 2017 lists an estimate of $35,000 for adding new wood windows. Such a project has a Joy Score of 8.7