A friend of mine purchased her home 15 years ago and decided to select the smallest of the three bedrooms as the master bedroom due to its cozy features, such as a corner fireplace, a small bathroom, and proximity to her son’s room.
However, with time, her son has grown and they now long for a secluded master suite with a peaceful environment to unwind, read or take a hot bath.
This desire for a private retreat is not unique to my friend, as almost every newly built home includes an opulent master suite, as builders understand the preferences of buyers. A beautiful master suite is often one of the most sought-after features in a home.
My friend is faced with the question of whether investing in a new master suite will provide a return on her investment when she sells the house in the future.
This is a crucial consideration to make before embarking on any remodeling project, especially if the goal is to increase the selling price.
To answer this question, one can refer to the annual “Cost vs. Value” study published by Remodeling Magazine, which is a trade publication targeting professional remodeling contractors.
The study compiles data collected from real estate agents across the country to determine average returns on investment for different home improvements.
In real estate markets with older homes, returns on investment tend to be higher than those in slower markets and usually exceed the cost of improvements. Some of the hot markets include Honolulu, San Francisco, San Diego, Seattle, Minneapolis, Boston, DC, Birmingham, and Garden City.
In specific areas, certain types of additions have a better return on investment.
For instance, building a deck in San Diego is a lucrative choice, while adding a second floor in Washington, DC, has returns around 91 percent.
In Garden City, almost any significant improvement has a return of over 125 percent of the cost.
According to the study, minor kitchen remodels have consistently shown a high return, with the national average cost recouped at 88 percent.
However, this may vary based on the location, as in slow-moving areas, the return may not be as high.
Bath remodels and major kitchen remodels have also shown to have a good return on investment.
Investments in home office additions or replacing windows or siding can be more uncertain, as the return depends on the location.
For instance, the average cost recouped for replacing windows in Cleveland is under 30 percent, while it is closer to 110 percent in New Haven.
Some improvements can also enhance a house’s curb appeal and increase its marketability.
For example, replacing outdated siding in DC or Chicago not only boosts the price by over 120 percent of the cost but also makes the house more attractive to potential buyers. (Building a new home? Check out popular options to add to your new home project).
Ultimately, if one plans to live in their home for an extended period, the short-term return on investment may not be as important.
The improvements made to the home can increase the quality of life and provide enjoyment for a longer period, which cannot be quantified in monetary terms.
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