Home improvement can be a great way to make your house feel like home, but it’s important to keep in mind the return on investment before tackling a project. It’s also essential to think about whether you want the improvements for resale or your own comfort and enjoyment.
A new roof, updated kitchen or remodeled bathroom are all ways to add value to your home. But many homeowners are choosing to take a more modest approach to improving their homes during the pandemic. About 3 in 5 homeowners have taken on home improvement projects since March 1, according to a recent NerdWallet survey, but some are reluctant to hire contractors. Those who have been lucky enough to find help are getting a good return on their efforts: On average, they spent $6,438, and they were able to recoup about 80 percent of their costs.
One reason that home improvement spending is up so much this year is because of rock-bottom interest rates. “It’s a very inexpensive time to borrow money,” Anderson says. “That makes it a lot more attractive to do a lot of work on your house.” The biggest increase in home improvements over the past two years has come from work done outside the house. Deck construction is up more than threefold, and fence construction is up nearly as much. This is a result of homeowners being more likely to stay at home during the pandemic and entertain guests on their back porches rather than in restaurants or bars, he notes.
Millennials are the generation most likely to renovate in order to prepare for selling their homes, while baby boomers are least inclined to do so. Regardless of the generation, however, most people who undertook projects this year did so for a variety of reasons. The most common response, cited by about 29% of respondents, was a need to repair or maintain their houses.
A smaller group of homeowners — about 26% — said they were working on home improvements because they were preparing to sell. And the rest, roughly 11% of all respondents, were doing so to increase their comfort in their current homes.
It’s important to remember that not all home improvements add value, and the return on investment can vary widely. In fact, most renovations don’t pay for themselves if you’re trying to sell the house later on. It’s not always possible to recoup your costs, even for a major kitchen remodel or a new roof.
Renovating for your own comfort and enjoyment is a smart move, but it’s best to talk to real estate professionals about the type of improvements that will most likely recoup your expenses. And don’t overspend: Adding features that are too distinctive or outpace the style of the neighborhood could hurt your resale value. For example, installing a fancy fountain or an in-ground swimming pool in a neighborhood where the other yards are relatively modest may make your house stand out for all the wrong reasons.