Since the pandemic began over two years ago, most of us have been spending more time in our homes. And, for many homeowners, that additional home time has meant more remodeling projects! So which projects offer the best return on investment?
The 2022 Remodeling Impact Report from the National Association of REALTORS® (NAR), in cooperation with the National Association of the Remodeling Industry (NARI), looks closer at recent remodeling results, including cost recovery estimates. The report includes feedback from three unique perspectives— consumers, remodeling professionals, and real estate agents.
REALTORS® provided an estimate of the potential dollar value each project would add to a house during resale, and NARI members estimated the cost of each job. Finally, the figures were combined to tabulate recovered project cost estimates.
Following are the top five remodeling projects, ranked by cost recovery:
1. Hardwood Flooring Refinish
The estimated cost recovery for refinishing hardwood floors was 147%, significantly higher than any other remodeling project included in the survey.
Hardwood floors can become scratched and dull over time, although the cost to refinish them is substantially less than installing new wood flooring. So, it’s not surprising that this remodeling project can yield high dividends.
2. New Wood Flooring
Even if homeowners have to install them, new wood flooring can make sense from a financial perspective, with a 118% cost recovery estimate.
According to the research, the pandemic had more notable impacts on some wood flooring projects than others. For example, over three quarters (77%) of consumers who installed new wood floors say they would have undertaken the project regardless of the pandemic. But 100% of respondents who refinished their wood floors say the pandemic had no impact.
3. Insulation Upgrade
According to remodeling and real estate professionals, insulation upgrades provide an even payback, with a cost recovery estimate of 100%.
Improving a home’s insulation is a popular and practical remodeling project that can make a home feel more comfortable and reduce the occupants’ heating and cooling bills.
4. Basement Conversion to Living Area
The estimated cost recovery for finishing a basement was 86%. Not surprisingly, many homeowners have felt cramped for space during the pandemic, and adding square footage in the basement can be a practical and economical option.
Nearly three-quarters of home remodelers (74%) say they would have converted their basement to a living area regardless of the pandemic. Among REALTORS®, 17% reported increased demand for basement living areas during the pandemic.
5. Closet Renovation
Closet renovations rounded out the top five renovation projects with an 83% cost recovery estimate.
Homeowners achieved better functionality and livability from their closet renovations, and 86% of them would have tackled their closet renovation project regardless of the pandemic.
Considering all the projects included in the survey, 83% of consumers said the pandemic didn’t impact their decision to remodel. However, 86% of respondents also report that remodeling one area of their home inspired them to tackle other projects.
Remodeling professionals confirmed this result. Three out of five NARI members (60%) said the scale of projects grew either into a larger project or remodeling more than one room due to the pandemic.