REMODELING Magazine, owned by BUILDER corporate parent Hanley Wood, on Tuesday released its 33rd annual Cost vs. Value Report that found exterior improvement projects yield the greatest return on investments. Nine of the 10 leading investments were exterior home improvements, with the exception of a minor kitchen remodel. The leading returns were primarily siding, doors or decks.
“As in years past, the national averages for exterior replacements outperformed those of larger discretionary remodeling projects,” said Clayton DeKorne, editor-in-xhief of REMODELING Magazine. “Exterior facade facelifts improve the curb appeal and make a great first impression as buyers approach the home that translates to real dollars at the closing table which is why we see such tangible returns on that investment.”
According to the 2020 report, the overall cost-to-value ratio stands at 63.7%, down from last year, and well below the decade-high of 71.2% in 2014. As in prior years, there are significant variations in return in different regions. The average regional payback for the 22 projects in the 2020 Cost vs. Value Report ranges from a high of 132% for a garage door replacement in the East South-Central region to a low of 40% for an upscale master suite addition in the same region.
The 2020 report surveyed nearly 1,400 full-time real estate professionals, each with a network of more than 100 consumers, about returns for 22 home improvement projects in more than 100 U.S. markets.
Top Ten Cost vs. Value: National Averages
|Manufactured Stone Veneer|
|Garage Door Replacement|
|Mid-range Minor Kitchen Remodel|
|Fiber-Cement Siding Replacement|
|Vinyl Siding Replacement|
|Vinyl Window Replacement|
|Wood Deck Addition|
|Wood Window Replacement|
|Steel Entry Door Replacement|
|Composite Deck Addition|
Principle takeaways from the 2020 Report:
- Curb Appeal Projects Provide the Highest Returns: Nine out of the top ten high return projects are exterior replacement – or high curb appeal – projects. The three exterior projects with the highest recoup on investment are manufactured stone veneer installation (95.6%), garage door replacement (94.5%), and siding replacement with fiber-cement material (77.6%). Wood or composite deck projects and window replacement also provided high returns.
- Interior Projects Appeal to Owners, Lag Return on Investment: Only one of the top ten projects was an interior improvement. The highest recouping interior project, minor kitchen remodel, came in at 77.6%. Feedback indicated that larger discretionary projects, such as kitchen, bath, and master-suite remodels, tend to be too individualized to provide broad appeal.
- Rates of Return Impacted by Rising Materials Costs: While the overall downward change since last year is modest, the latest Cost vs. Value Report still reflects a healthy remodeling market. What’s driven Cost vs. Value figures down slightly has most to do with a steady rise in building material costs with some impact from tariffs that have roiled select markets. The combination of rising costs, and flat, or in some cases slightly lower value estimates, has led to a downturn in the value over cost ratio, or cost recouped, compared to last year.
- New for 2020: Siding projects were split out to include vinyl and fiber-cement as separate exterior projects for survey respondents to consider. As a result, both material types landed in the top 10 most profitable projects.