Best home improvements to increase home value in NJ

🏠 Which home improvements raise your home’s value in NJ?

🏠 Why dream bathrooms and kitchens may not be worth the cost

🏠 Popular home improvements that could hurt your home’s value

Given high interest rates and lack of housing inventory in New Jersey, many residents are opting to stay in their current home and instead remodel their existing space.

However, if you are eventually planning to sell, be careful how much you spend.  Many of the most popular remodeling projects will not increase the value of your as much as you may think.

That dream kitchen, spa bathroom and upgraded master suite may give you the touch of luxury you want, but they have among the worst return on investment when it eventually becomes time to sell.

Also keep in mind that many home improvement projects have the potential to hugely impact your property taxes.

I wrote more about that in a previous article: Beware! These home improvements could raise your property taxes in New Jersey

What home improvements do people want?

A survey of over 6,000 realtors reveals the expectations of buyers, and how home sellers can make changes to their existing properties to meet those expectations.

The biggest return on investment is for projects that enhance your home’s exterior or curb appeal.

On the website remodeling.hw.net, realtors say a run-down exterior immediately leaves a bad impression on prospective buyers.

“They (buyers) tend to enter the property wary and reluctant to spend large on the property,” the experts say, “If, on the other hand, the home looks well taken care of, they enter with a more positive view from the outset.”

If you are planning to stay in your home a while, return on investment is only part of the decision-making process.  Ultimately, your project should make you happy in your current home.

Be aware, however, that some of the most desired and popular remodels will add little value to your home at resale.

That dream kitchen, spa bathroom and upgraded master suite may give you the touch of luxury you want, but they have among the worst return on investment when it eventually becomes time to sell.

Here is a look at the home improvements that have the highest and lowest return on investment.

BEST – HVAC conversion to electric

It’s not a sexy home improvement project, but converting to a heat pump or other electrical heating and air conditioning system will, on average, allow you to recoup your investment…and then some.

The average cost of replacing your existing HVAC unit with and electrified option is $17,747.  At sale, you could expect to recoup over $18,000, for a 103.5% return.

WORST – Luxury Master Suite

If you are thinking of adding a new master bedroom and creating your dream space, a survey of realtors say this is one of the worst projects to undertake in terms of adding value to your home.

Adding a luxury suite can cost as much as $300,000, but adds as little as $73,000 in value.  On average, homeowners will only recover about 22% of the cost of the project

BEST – Garage Door Replacement

This is another curb appeal addition that can add esthetic appeal to your home, but is also a strong investment.

Averaging a cost of $4,300, homeowners can expect to add $4,400 in value to their home, for a 102.7% return.

WORST – Luxury Bathroom Remodel

Creating a spa space in your home can give you a place to relax and recharge.  It’s definitely a boost to your quality of living.  However, adding luxury additions like a rain shower head, steam room, bidet, customs cabinets and upscale lighting and fixtures are not an investment that will allow you to recoup what you spend.

An upscale remodel can cost $76,000 or more.  On average, you will only recoup about 37% of the cost at sale.

BEST – Replace Entry Door

It’s the first thing people see when they enter your home, so it makes sense that a new front door would add value.

Expect to spend as much as $2,200 to replace the door, side windows and transom.  However, at sale, you might recoup up to 101% of that investment.

WORST – Major Kitchen Remodel

Creating a dream kitchen is the goal of many homeowners, and these projects can quickly escalate in cost from $70,000 – $100,000.

However, you will recoup only about 42% of what you spend.

BEST – Moderate to Minor Kitchen remodel

Realtors say if you want to add value and recoup more of your investment, scale back your plans.

A minor kitchen remodel that replaces cabinet faces, countertops and backsplash can cost as little as $27,000, but you might recoup as much as 85% of what you invest in that project.

WORST – New Deck

Whether you are using wood or composite decking, you would be lucky to recoup half of what you will spend on this project.  Less if it is an elaborate and more expensive design.

Composite decks can cost $23,000 – $50,000 and at sale, you may get less than 40% of that cost back.  A simpler wooden deck can cost less than $20,000 and you may get back 50% of that investment at sale.

BEST – Siding Replacement

New vinyl siding is one of the best home improvement projects with the highest return at the time of sale.  It freshens up your home and gives it more curb appeal.  On average, realtors say you can expect to get back almost 95% of what you spend.

There is a relatively new product on the siding market called fiber cement siding.  It costs more but looks and feels more like wood siding.  It can also increase the energy efficiency of your home.  The return on this investment is not as high as vinyl siding, due to the cost, but you could expect to get back as much as 88% of what you spend on the project at the time of sale.

The Bottom Line

If you only plan to stay in your home for the short term, less than five years, it is unlikely that you will recoup a large percentage of your investment on things like a new bathroom, kitchen, master suite or deck.

The return may be higher if you plan on staying in your home 10 years or more.

Ultimately, the experts say, you have to balance what will make you happy in your current home versus what you may be able to find in a new home.

What to spend on home renovations?

That depends on what your goal is and where the money is coming from.

If you are financing the entire project, interest costs can add up quickly and inflate the cost of the renovations.

If you are able to pay cash, or even do some of the work yourself, that will bring down the cost and possibly allow you to recover more of the money you are spending.

As a general rule, realtors say you should not spend more than 10% of your home’s current value on any one home improvement project.

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