5 Home Improvements That Deliver the Best ROI

Home renovations aren't a cheap date. A kitchen remodel can easily cost $25,000-$50,000. The price tag on a new bathroom can be $10,000-$30,000. Outdoor living areas can range in price from $10,000-$25,000.

With that kind of investment, many homeowners want to see a healthy return. To help you decide on your next project, Maleno looks at five Home Upgrades that deliver the best return on investment (ROI). Additionally, we'll look at a few upgrades that boost productivity for people who work from home, how homeowners can lower their taxes the year they sell their house, and what architectural home styles see the highest appreciation.

An Important Note About 2023 Renovations

We're now three years out from the start of the pandemic, and costs for construction are still significantly higher than they were in pre-COVID days. For that reason, homeowners need to know that they may not get every penny back for their renovations.

Today, renovations should be considered an investment in a higher quality of life as well as a smart financial move. According to a recent National Association of Realtors (NAR) study:

• 84 percent of owners have a greater desire to be in their homes after remodeling
• 69 percent have increased enjoyment in their home
• 57 percent feel happier in their home

The NAR also calculated a "Joy Score" for a variety of remodeling projects. From 1 to 10, this score considers how fulfilled people were after a job was completed. The best investment didn't always align with the highest Joy scores, but it also shows that ROI shouldn't be the only consideration when remodeling.

Further, with half the U.S. workforce still working remotely, updating a home may be the key to a more productive and fulfilling workday, which may lead to a notable career advancement.

With all that said, let’s dig into the five best home upgrades:

1. Refinished Hardwood Floors

In terms of ROI, the best home upgrade you can make to home is refinishing your hardwood floors. Not only does it yield an estimated 147% cost recovery, equating to a 47% ROI, but it also ranks 10/10 on the NAR's Joy Scale. There are some fringe benefits of hardwood floors as well: they're easy to clean, improve inside air quality, and enhance the aesthetic of your home.

2. New Hardwood Flooring

3. Insulation Upgrade

Insulation is often forgotten about because we don't see it. But it can make a serious difference in a home. Although it's unlikely you'll make money off this project, you'll realize a 100 percent cost recovery. 

What’s more, you can save up to 40 percent in heating and cooling bills with property insulation, equating to hundreds of dollars a year. Cozy house owners who are saving money must be pretty happy, because they rated this project as a 10/10 on the Joy Scale.

4. Roofing

Roofing isn't the most exciting home upgrade, but it's an essential one. Your roof keeps you and all your belongings out of the elements, lowers utility bills, and may even help reduce home insurance costs. Like insulation, you'll likely realize 100 percent cost recovery. It also rates 9.8/10 on the joy scale.

5. Garage Door

A new garage door is always a great upgrade. Not only is it a major boost to your home's curb appeal, but you're likely to recoup 100 percent of your costs. Plus, it ranks at a 9/10 on the Joy Scale.

Potential Tax Benefits

You can’t deduct every home improvement you make, but if you keep track of your expenses, they may help you reduce your taxes when you sell your home. What’s more, there are a few upgrades that may make you eligible for tax credits.

For instance, improvements such as installing heat pumps, insulation, and energy-efficient windows, may make you eligible for tax credits. You may also be able to deduct expenses for a home office if you run a business from your home.

Valued Architectural Styles

In the current housing market (2023), almost every home, regardless of its architectural style, is fetching offers at or above asking price. However, there are a few aesthetics that stand out among the rest. Currently, the five architectural styles that see the greatest appreciation are:

1. Modern – open living spaces, clean, geometric line, and function-over-form.
2. Traditional – a mix of classic elements pulled from homes past with modern elements.
3. Contemporary – emphasize energy efficiency, sustainable materials, and lots of natural light.
4. Colonial – known for its symmetry, characterized by evenly spaced shuttered windows.
5. Ranch – open floor plans and easy connections to the outdoors.

However, favored architectural styles, like interior design trends, are always in a state of flux. Whether you’re building a new home or buying one, don’t go by what’s “in,” go by what works best for you.

Invest with Insights

Before making upgrades or buying a new home, find a full-service real estate and new construction company that can guide you toward making the best decision possible for you and your wallet. If you're interested in learning more about Maleno and how our seasoned team of experts helps our homebuyers and sellers, reach out today.

Contributed by Matt Flowers