Homeowners often think that just keeping up their home with the market equates to added value for a home. General upkeep is necessary for not falling behind in the market, so home renovation projects are required to add home value. Homeowners often find this concept confusing.
The New York Times spoke with Jonathan J. Miller, president and chief executive of real estate appraisal firm Miller Samuel, who said, “The simplest example may be refinishing your floors or repainting the inside of your house. Those are things that need to happen every so often so the house doesn’t fall behind the market.”
Furthermore, homeowners think that the amount of money they put into a remodeling project should result in an equal return to added value. However, that's often not the case. While homeowners may put put in $100,000 in a renovation project, the return value may only be $50,000. In line with our annual Cost vs. Value report, the New York times reports that new roof and insulation offer great financial returns, along with garage, siding, and window replacements. While kitchen and bathroom upgrades make owners happy, they don’t necessarily add the most value to a home for the cost the projects require.
As Miller tells the New York Times,
“'If you’re in a housing market with very tight supply, all of a sudden the value spread between a home that needs a lot of work and the home that doesn’t need any narrows,' Mr. Miller said. 'In a market where there is an oversupply, it’s just the opposite. There’s more of a premium for a home that has already been done.’"