5 Upgrades to Increase Home Value: 2022 Trends
The cost of construction materials, labor and project financing are rising, adding to the challenge of getting the most value out of a remodel. We'll help you identify projects that add to your property value — and avoid projects that decrease it.
Katie J. Skipper
(She, Her, Hers)
BECU Community Content Manager
Published Jun 17, 2022 in:
Mortgages & Home
Maybe you want working from home to be more comfortable. Or maybe you're renovating your fixer-upper. Or maybe you're getting ready to sell your home. If you're considering a remodeling project, staying up to date on market trends can help you recoup as much of your costs as possible for the best return on your investment.
Growth in Home Improvement Spending Expected to Slow by 2023
If you're planning to take on a home improvement project before the end of 2022, you'll still be part of a hot trend before rising costs cool things down a bit.
The pace of home improvement spending has taken off during the pandemic and is projected to hit a high of 19.7% in year-over-year increases by the third quarter of 2022, according to the Joint Center for Housing Studies of Harvard University. The growth in year-over-year spending is expected to slow to 15.1% while reaching an estimated $450 billion in the U.S. by the first quarter of next year.
As the costs of building materials, labor and loan interest rates rise, the growth in remodeling is likely to slow down even more.
Keep an eye on how costs are changing and what buyers prefer before you jump into a big project.
Know the Current Local Market
Some advice is timeless and universal (like choosing neutral colors for interior walls), but costs and tastes differ across the country and change over time.
When doing your homework on home improvement trends, be sure your information is current and tailored to your area.
Cost First, Value Later
When you take on home improvement, whether you do it yourself or hire professionals, you're taking on costs for projects that, if done right, will add to the value of your home. But keep in mind that the payback is rarely 100%, and you won't get to enjoy the financial benefit of the work until you sell the house.
If you're getting the house ready to sell, be sure the colors and materials you choose are on trend, aligned with the style of your home and consistent with neighborhood character.
Avoid Overly Custom Changes
It makes sense to prioritize projects that make you more comfortable and make the home more functional for your needs while you live there. But, unless you're never planning to move, be sure to avoid changes that are too customized or personal, otherwise, you'll end up decreasing your property value. That luxury bathroom or bold tiling choice will require time, effort and money for the next homeowner to replace if they don't share your taste.
Top Home Improvements That Add Value in 2022
One of our favorite tools is Remodeling Magazine's 2022 Cost vs. Value report. It lists the average cost of home improvement projects and the money you're likely to recoup. You can look at national, regional, city and zip code statistics, and you can sort by project name, job cost, resale value and cost recouped.
The list doesn't differentiate between do-it-yourself (DIY) and professional work, so if you go the DIY route, you'll likely spend less than the prices listed — but the amount you recoup will also depend on how well you do the work.
Nationally, these are the top five projects that returned the greatest percentage of costs at resale, according to Remodeling Magazine's 2022 report:
1. Garage Door Replacement
A new garage door updates the look of the home and adds to curb appeal. The national trend is a four-section steel door with foam insulation and insulated glass windows across the top panel. It's on the low end for project costs, averaging $4,041, compared with just under $4,000 last year. The rate of return remains high at 93% of costs, although that's 1% less than last year, according to Remodeling's reports.
2. Manufactured Stone Veneer Installation
Homebuyers still like a little rock on their homes. Installing manufactured stone siding along the lower third of the street-facing façade adds to curb appeal. This upgrade averages just over $11,000 nationally, a $1,000 increase from last year, and you'll recover about 91% of the costs when you sell, a decrease of 1%.
3. Minor Mid-Range Kitchen Remodel
A fancy chef's kitchen might be your dream, but if it's not the next homebuyer's dream, too, you can expect a lower payoff. If your goal is to recoup as much of your costs as possible, better to go with a minor mid-range kitchen remodel. The national average cost increased about $2,000 from last year to just over $28,000. You'll recoup about 71%, a drop of about 1% from last year. Remodeling suggests replacing the cabinet and drawer fronts with Shaker-style panels and new hardware, getting new energy efficient appliances, replacing laminate countertops, getting a mid-priced sink and faucet, new floors and adding a fresh coat of paint.
4. Fiber-Cement Siding Installation
Adding factory primed and painted fiber-cement siding is a high-value upgrade nationally (68% cost vs. value), but this is where paying attention to your local market is important: In Seattle, vinyl siding replacement makes it into the top three, with 87% recouped costs, while fiber-cement siding doesn't make the top five.
5. Vinyl Window Installation
New insulated vinyl windows round out the top five nationally for projects with the highest return on investment, according to Remodeling's report. This improvement adds curb appeal and energy efficiency to the home. The national average cost is over $20,000, an increase of more than $1,000 from 2021, with 68% in recouped value, a decrease of 1% year-over-year.
For comparison, at the bottom of Remodeling Magazine's national data is an upscale primary bedroom addition: You'll spend more than $350,000 on average, but you'll only recoup about 46% of costs.
Projects That Might Decrease Value
Not every home project is an improvement. These projects could decrease your home's value, so you might think twice before you invest in them.
Swimming Pools
With more people staying at home because of the pandemic, adding a swimming pool increased in popularity among homeowners, but the experts are divided on whether these will add to or detract from the desirability of the home to potential buyers. Many people, especially parents of young children, see pools as a safety hazard. Pools also require time and money to maintain, and they take up a lot of space that the kids could use to run around and play.
Converted Garage
If you're thinking about adding square footage to your living space, you might start eyeing your garage, but, depending on where you live, converting your garage might reduce your home's value, along with sacrificing parking spots. People like to use garages for their cars, outdoor equipment and storage.
Converting a Bedroom to an Office
With more people working from home, an office might seem like a higher-priority amenity than a spare bedroom. But bedrooms typically add to the value of a home. These types of conversions can cost up to $3,000, according to gobankingrates.com, citing HomeAdvisor. If the future buyer prefers to use the space as a bedroom, you won't recover your costs.
Expensive Landscaping Features
Creating beautiful outdoor spaces is a well-known way to increase value, but it is possible to go overboard. Over-the-top, customized landscaping features like an outdoor pizza oven, koi pond or a big concrete patio might not appeal to homebuyers. Instead of being excited, they might be thinking about how much it will cost to tear it out.
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Katie J. Skipper
(She, Her, Hers)
BECU Community Content Manager