Issue Date: January 18, 2006

Which Improvements Pay Back?

By Jody Zink
Licensed Realtor in Ohio & Michigan

You’re toying with some home improvements. Or maybe you’ve already begun. Some reap bigger rewards than others.

The real paybacks come from getting your house in line with neighborhood standards. Adding a second bathroom in a community where most homes already have two will give a higher return on investment than building an addition making your home twice as big as other homes on the block.

It’s sort of like keeping up with the Joneses. And standards do change. Average homes in the 1950’s had two bedrooms and a single bathroom. Kitchens typically were not overdone, and closets? Ty-neee. Average homes nowadays have at least 3 beds and 2 baths, larger kitchens are becoming more popular, and closets are sometimes larger than a college dorm room.

Kitchen and bathroom improvements generally add the most value to a home. They’re also the most costly. On average in the Midwest, they recover more than 85 percent of their cost, according to Realtor Magazine’s latest “Cost vs. Value Report.” Naturally, the improvements should be appropriate for the home. Spending $100,000 on a kitchen in an average home will not bring a return.

Replacing a furnace or central air conditioner can yield big returns: an average of more than 90 percent, according to studies.

When considering outdoor projects, decks are popular. On average, building one can recoup 85 percent of its cost in the Midwest. Building a pool, however, may not be the best investment. It’s one thing if you absolutely want one. Just know that when it’s time to sell, it will diminish the number of potential buyers. That’s because many homeowners won’t want the maintenance hassle for only three months out of the year. Your enjoyment may far outweigh what money you get back.

Siding replacement is another project that typically yields a good payoff: an estimated 95 percent in our neck of the country. A do-it-yourself exterior paint job can save you money, especially for a one-story home. Skip the paint prep though, and you may be painting again soon. (Especially with red paint. I learned this first-hand.)

Improvements that typically offer the lowest return on investments: finishing a basement and/or adding a home office. A home office though, has a different kind of value. For one, the cost is tax-deductible for those who run a business from their home. Plus, a home office would pay for itself over time with money earned from that business.

Keep in mind; market conditions can affect your payback value, too. If it’s a hot market and homes are selling fast, you might expect a higher payback than in a slow market.

What you can’t measure in dollars or cents is the pleasure you’ll derive from your home’s improvements. Since you’re the one who may be living there a while, isn’t that the payback that matters most?

Jody Zink is a licensed REALTOR in Ohio and Michigan with the Loss Realty Group. Her column appears every other week in the Toledo Free Press. She can be reached at jody@jodyzinkrealtor.com or 419-725-1881.