Home remodeling projects are often seen as financial losers - their cost nearly always exceeds the increased value they add to your home. But lately, that gap has been shrinking - and in some parts of the country, projects like a bathroom or kitchen upgrade have reached the point where they can actually provide a net financial gain.

The relative value provided by remodeling projects has increased for a second consecutive year, according to the annual cost vs. value report from Remodeling Magazine. In fact, the relative value increased for all 35 remodeling projects the study examined, from replacing a front door to an upscale bathroom remodeling.

To be sure, on average, remodeling projects still tend to cost more than they'll increase your home value. For 2014, the national average was a cost-value ratio of 66.1 percent; meaning that for every $100 spent on a project, you'll get an average increase in home value of $66.10. Even so, that's up from 60.6 percent last year and the biggest increase since 2005, when the average ratio hit an all-time high of 86.7 percent.

Best returns on entry doors, wood decks, attic bedrooms

Once again, the home improvement project that provided the greatest return on investment was the simple installation of a steel entry door, the same as last year. This year, such projects averaged a 96.6 percent return on cost, up from 85.6 percent last year.

The projects with the next-highest returns were adding a wooden deck, with an 87.4 percent return on investment, and creating an attic bedroom, with an 84.3 percent return. The latter was noted for being a highly efficient way of adding living space.

The worst returns on investment were provided by remodeling a home office, with a national average of 48.9 percent, and adding a sunroom with an average cost-value ratio of 51.7 percent.

Some projects can add value

The return on investment provided by various home improvement projects varies according to what city or region you live in. Residents of the Pacific coast states could expect the greatest return on investment, with an average cost-value ratio of 88 percent on all projects.

Home owners in the Pacific coast region actually averaged positive cost-value ratios on several projects, with adding an attic bedroom, a basement remodel, adding a wood deck, a steel entry door and a minor kitchen remodel all enhancing the value of a home by more than the cost of the projects.

Cost-ratio averages of roughly 75 percent were realized by those in the West South Central ( Tex., Okla., Ark., La.), New England, East North Central (Great Lakes) and South Atlantic states. The lowest returns were for home improvements in the Middle Atlantic and West North Central (Great Plains), with returns of 63 and 57 percent, respectively.

For the full breakdown of cost-value ratios for all 35 projects by region and city, see Remodeling Magazines 2014 Cost vs. Value Report online.


Published on December 1, 2012