The home resale market has picked up in the last few years, with prices very nearly recovering all the ground they lost during the great recession. The home remodeling market is recovering as well, and is now a $300 billion industry, according to the Joint Center for Housing Studies of Harvard University.
Why are people still hesitant to buy, but ready to sink more money into their old house? Part of the reason is because the percentage of existing homes available for sale is near an all-time low, so there aren’t many choices if you want to move to a new home. But also more people, including retirees, are beginning to appreciate their old home, which may be in a better location — closer to town, in an established neighborhood — while still recognizing that the old place may need some work.
The average renovation pays back about 65 percent of its cost if you sell your house soon after the remodel is completed, according to a Remodeling Magazine survey of real estate professionals. But the amount of payback varies widely, depending on the type of improvement.
Click through the gallery to see five home improvements that are likely to pay off.
No matter what you do, don’t “overimprove” your house. It doesn’t make sense to spend $100,000 on a new kitchen renovation if your house is only worth $300,000, or if your house only has one bathroom. And while adding insulation may pay back well in the Northeast, it will not add as much benefit where the climate is more moderate.
Before you decide on any renovation, look at your house with a critical eye. What aspects of your house are important? What are its drawbacks? Fix the drawbacks, and focus on the important items.
Tom Sightings is the author of “You Only Retire Once” and blogs at Sightings at 60.