It's all about conformity. Resale value of a home is usually based on the "standard or prevalent upgrades" of the neighborhood or tract. This is an important fact for homeowners and sellers to consider, and it becomes more relevant in older neighborhoods because new tracts have fairly similar features. True, a new tract will have the "builder's basic" and the "builder's upgrade", but they are easy to put valuation on and will not deviate in a large degree or make a home unsalable.
Why would you want to keep up with the Jones's? The key word is "keeping up", not "overdoing". Homes that have improvements quite a bit above the general neighborhood will NOT sell very much above the average home in the neighborhood.
KEEPING UP: Creativity over expense can bring big returns. A home in disrepair in a neighborhood of conforming but not fancy homes will fetch a bottom price. Features like replacement windows and new front door, bathroom and kitchen REFURBISHING with updated appliances keep the property within the "standard" for most neighborhoods. The "keeping up with the Jones's (trend)" comes into play when outdated wallpaper should be replaced by crisp new paint and a rickety patio cover should be torn down or replaced. Before tackling a remodeling project, it's a good idea to talk with local Realtors. They know what's an asset and what's a White Elephant!
OVERDOING: Imagine a 3000 square foot house which has a newer add-on and as well as travertine flooring, granite counters, crown moulding, greek columns etc. on a street with 1500 square foot single story 1970's homes. It will NOT sell for twice the neighbor's price! It's an old adage with smart buyers to purchase the lowest valued home in a neighborhood, rather than the most improved (usually highest priced) home on the street.