Not all home improvements are created equal. Some renovations add significant value to your property, while others barely move the needle—or even decrease value. Understanding which improvements offer the best return on investment (ROI) helps you make smart decisions about where to spend your renovation budget.
This guide breaks down the ROI of common home improvements based on real market data, helping you prioritize renovations that actually increase property value.
Understanding ROI in Home Improvements
ROI for home improvements is calculated as:
Example: A $20,000 kitchen renovation that adds $30,000 in value has a 50% ROI.
Most home improvements don't return 100% of their cost. The best renovations return 60-80% of cost in added value. Focus on improvements that enhance livability AND value.
High ROI Improvements (60%+ Return)
1. Minor Kitchen Remodel (72% ROI)
Average cost: $23,000
Value added: $16,500
ROI: 72%
What it includes: New cabinet fronts, countertops, appliances, flooring, paint
Why it works: Kitchens sell houses. A modern, functional kitchen is a top priority for buyers. Focus on cosmetic updates rather than full gut renovation.
2. Garage Door Replacement (94% ROI)
Average cost: $4,000
Value added: $3,750
ROI: 94%
Why it works: High visibility, improves curb appeal significantly, relatively low cost.
3. Manufactured Stone Veneer (92% ROI)
Average cost: $10,000
Value added: $9,200
ROI: 92%
Why it works: Dramatically improves curb appeal, makes home look more expensive, relatively low cost.
4. Siding Replacement (67% ROI)
Average cost: $17,000
Value added: $11,400
ROI: 67%
Why it works: Improves curb appeal, reduces maintenance, can improve energy efficiency.
5. Entry Door Replacement (65% ROI)
Average cost: $2,000
Value added: $1,300
ROI: 65%
Why it works: First impression matters. New entry door improves security and aesthetics.
Moderate ROI Improvements (40-60% Return)
6. Deck Addition (66% ROI)
Average cost: $16,000
Value added: $10,600
ROI: 66%
Why it works: Adds outdoor living space, popular with buyers, enhances lifestyle.
7. Window Replacement (68% ROI)
Average cost: $20,000
Value added: $13,600
ROI: 68%
Why it works: Improves energy efficiency, reduces maintenance, better aesthetics.
8. Bathroom Remodel (60% ROI)
Average cost: $24,000
Value added: $14,400
ROI: 60%
Why it works: Second most important room after kitchen. Focus on functional updates, not luxury.
Low ROI Improvements (Under 40% Return)
9. Major Kitchen Remodel (53% ROI)
Average cost: $75,000
Value added: $40,000
ROI: 53%
Why it's lower: High-end finishes and custom features don't always appeal to all buyers. You may not recoup premium costs.
10. Master Suite Addition (52% ROI)
Average cost: $150,000
Value added: $78,000
ROI: 52%
Why it's lower: Very expensive, may not match neighborhood standards, buyers may prefer different layouts.
11. Home Office Remodel (48% ROI)
Average cost: $35,000
Value added: $16,800
ROI: 48%
Why it's lower: Not all buyers need or want a dedicated office. Better to keep space flexible.
Improvements That Rarely Pay Off
Swimming Pool
ROI: 20-40% (varies by market)
Why: High maintenance costs, safety concerns, limited appeal, seasonal use. In some markets, pools can actually decrease value.
High-End Landscaping
ROI: 20-30%
Why: Expensive to install and maintain. Buyers may prefer simpler landscaping they can maintain themselves.
Luxury Finishes
ROI: 30-50%
Why: Premium materials (marble, high-end appliances) don't always appeal to all buyers. You may over-improve for the neighborhood.
Market-Specific Considerations
ROI varies by market. Consider:
- Neighborhood standards: Don't over-improve or under-improve relative to comparable homes
- Local preferences: What buyers in your area value (e.g., basements in some regions, not others)
- Market conditions: In hot markets, improvements may return more. In slow markets, less.
- Property type: Condos vs. single-family homes have different improvement priorities
Improvements That Add Value Beyond ROI
Some improvements add value beyond just resale:
- Energy efficiency: Lower utility bills, tax credits, environmental benefits
- Accessibility: Aging-in-place features appeal to growing demographic
- Smart home technology: Increasingly expected by buyers
- Storage solutions: Always valued by buyers
Get Property Value Analysis
Before making improvements, get a comprehensive property analysis that estimates current value and potential value after improvements.
Analyze Your PropertyBest Practices for Home Improvements
1. Focus on Curb Appeal
First impressions matter. Exterior improvements often have better ROI than interior improvements.
2. Don't Over-Improve
Improvements should match neighborhood standards. A $100,000 kitchen in a $200,000 home won't pay off.
3. Prioritize Function Over Luxury
Buyers value functional improvements (new HVAC, updated electrical) over luxury finishes.
4. Consider Your Timeline
If selling soon, focus on high-ROI cosmetic improvements. If staying long-term, prioritize improvements you'll enjoy.
5. Get Multiple Quotes
Contractor prices vary significantly. Get 3-5 quotes before committing.
Conclusion: Smart Improvement Strategy
Not all home improvements are equal. Focus on high-ROI improvements that enhance both livability and value. Prioritize curb appeal, functional updates, and improvements that match your neighborhood's standards.
Remember: The best improvements are those you'll enjoy while living in the home AND that add value when you sell. Don't improve solely for resale—but don't ignore ROI either.
The goal isn't to recoup 100% of improvement costs—that's rare. The goal is to maximize value added while creating a home you love living in. Focus on improvements with 60%+ ROI, and you'll make smart financial decisions.