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Which home improvement project pays off the most?

home remodeling ROI
July 26, 2016

By Pam Leibfried

When you’re considering whether or not to remodel, there are a lot of factors to consider when deciding whether to go ahead and spend the money. And once you’ve decided to pull the trigger, you need to choose between a high-end remodel, mid-range remodel, or doing it on the cheap. But how do you decide? Do you consider how long you expect to stay in the house and enjoy your improvements? Or do you focus only on how much your project will increase the resale value of your home? 

The best smart-money answer is both because the number of years you will live in the house and your return on investment (ROI) are equally important factors in making decisions about any home improvement project you are considering. 

If you’re staying, your enjoyment of the home counts more 

How long you plan to stay in a home matters in making decisions about home improvements. Why? If you’re planning to stay in your home for the long haul, short-term resale value changes aren’t much of a factor for you. If you anticipate living there for the next 20 years, the best home improvements are those that will make your house more comfortable for you and your family, regardless of their impact on resale. 

For example, if you’re a gourmand who is staying put, you likely don’t care that you’ll only get back a fraction of what you’ll spend for professional-grade kitchen appliances, because you’ll be cooking with them for years. My friend Joe is a great example. He has a high-end kitchen, but he cooks and entertains all the time. The extra cost of a fully decked out kitchen was worth it for him. 

On the other end of the spectrum, if I were to remodel my kitchen, I would select options that are more mid-grade. Even though I enjoy cooking, I spend lots of my weekends and off time in Wisconsin visiting family. That means I don’t entertain much and don’t spend a quarter as much time in my kitchen as Joe does. Even though he spent more, he’s getting his money’s worth, especially when the expense of his kitchen remodel is spread out over many years of enjoyment. 

Measuring home remodeling enjoyment 
Can you measure the love you feel for your home? The National Association of the Remodeling Industry and the National Association of Realtors recently tried to assign numbered ratings to how much some common remodeling projects increase a homeowner’s enjoyment of their upgraded living spaces. They did a survey of homeowners who had done 20 different home improvement projects. Each homeowner was asked how much their happiness with their home had been improved by the upgrades they had just completed. The survey results were then turned into a numerical rating that the study dubbed a Joy Score

Only two projects had a perfect 10 out of 10 on the Joy Score scale: new fiber-cement siding and a bathroom addition. The fiber-cement “wonder siding” looks attractive and is practically maintenance free, so it’s no surprise that homeowners that replace their older, more upkeep-intensive siding would be happy with their home’s new shell. And as someone who grew up in a family of seven with one single, lone bathroom in the house, I can personally attest to the joy that having an additional bathroom would give a family!

If you’re selling soon, resale value counts more 

Remodeling considerations are different if you’re pretty sure your time in the house will be short-lived. Maybe you’re newly married and plan on having kids, so you’ll outgrow your home in a few years. Or your kids are nearly grown and you’ll likely downsize when they leave for college. You might intend to move to a new city in the near future for a job or for retirement. Or maybe you intend to make some improvements and “flip” the house for a profit. 

In any of these cases, you shouldn’t indulge your personal preferences. For instance, my friend Joe’s high-end stove probably isn’t the smartest choice for the typical homeowner – amateur chef or not – who is going to be selling soon. If you’re not staying long-term, you’ll want to pay closer attention to the return on your remodeling investment. But how can you know which project gives you the most bang for your home improvement bucks? 

There are a couple of really good national studies that provide a good start if you are researching the ROI on a project you’re considering for your home. 

  • Remodeling magazine’s annual Cost vs. Value Report analyzed 30 popular remodeling projects to determine how much they increase the typical home’s resale value. They broke down the results by region and by type of home (midrange or upscale). 
  • The Remodeling Impact Report from the National Association of the Remodeling Industry and the National Association of Realtors also recently reported on the return on investment of remodeling projects, with results based solely on estimates from realtors. 

And talking to a local realtor can be helpful too, if you’re still on the fence about how the home improvements you are thinking about might impact your home’s resale value. A realtor may have insights into what is a turn-on or turn-off to potential buyers in your local market. Then you can weigh all the information and factors and decide how to proceed. 


Pam Leibfried is a marketing content specialist whose love of words led to a writing and editing career. After a brief stint teaching English, she transitioned to corporate communications and spent 20 years at The Nielsen Company before joining Alliant’s content development team. Early in her work life, Pam’s friend Matt explained the benefits of a 401(k) and her dad encouraged her to start a Roth IRA. Their good counsel prompted her to prioritize retirement savings, which just might enable her to retire early so she can read more and live out the slogan on her fave T-shirt:  “I have a retirement plan: I plan on quilting.”