Kitchen Remodels and House Prices: A Study
New Kitchen Design:
Planning a new kitchen design in your single-family home is a great way to increase the value, functionality and enjoyment of your home. Choosing the right renovation project can increase your home value and give you a greater return on investment. Continue reading to find out more about kitchen remodels and home prices.
Plan Your Kitchen Remodel:
The ROI (return on investment) on your kitchen remodeling project is based on three main factors: the condition of the residential real estate market at the time of the sale, the characteristics of your local market, and the quality of your renovations. Kitchen and bathroom remodels are considered high ROI (return on investment) projects.
|(ROI) Return on Investment for various home projects|
|Project||Avg. Recovery %|
|Wood Deck Addition||60-75%|
|Minor Kitchen Remodel||80-85%|
|Major Kitchen Remodel||65-70%|
|Attic Bedroom Remodel||65-70%|
How Much to Remodel a Kitchen:
Knowing how much to remodel a kitchen is an important piece of information you need to know before starting out. When you are making decisions about renovation projects to your home, consider your needs, your must haves and the neighborhood in which your property is located. Many buyers choose a neighborhood based on its charm, its style of homes, nearby facilities and services, and an average price point which is within their buying range. Houses priced at the top of the local market see the least return on investments from renovations, and certain renovations simply do not raise the value of the house much above the local average, though it may considerably improve your enjoyment of the kitchen and house. It is during periods of increased real estate demands and increased economic activity that homes with well thought out renovations receive the greatest return on investment.
The lifespan of your renovation also plays a big role in the increased value of the home. Kitchen renovations and bathroom remodels last an average of ten years, whereas building an addition, adding an outdoor kitchen or pool, or finishing an unfinished “raw” space will add significantly more value to your home.
Location is also a consideration. Consider the climate the home is located in. adding a pool or an outdoor kitchen in an area where it is cold most of the year will add significantly less value, and can even decrease the price of the home, as they might be considered unwanted extra costs.
Kitchen Renovation Cost:
Kitchen renovation costs can be overwhelming, but there are many ways to leverage this great investment on your budget. Homeowners who have diligently saved up equity in their homes can take advantage of government subsidies, home equity loans, or cash out refinance programs to lessen the tax burdens of property improvements. The homeowner would initially only pay the interest on the loan, which for most people would be tax deductible. The principal on these loans will be paid when the home is sold. Be aware of your options and research all possibilities.
As a homeowner, while thinking about your kitchen renovation, considering the value you gain from the project over the cost recovery. The greatest return on investment will be the joy of living in an upgraded, newly renovated home. However, as a homeowner you can be smart about the renovations you choose to spend money on. Research your local market or contact a professional to see which home improvement projects are most beneficial to you when it comes time to sell your home. Remember to consider your needs, wishes, location, climate, and local market. More is not always better, and a higher cost renovation does not always equal a greater return on investment. If you love your home and love to live in it, it will be easy to sell your dream to the next homeowner. And with all renovation projects, keep in mind that your return on investment depends on whether a new home buyer is willing to pay more for your kitchen renovation, so choose your projects wisely.
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