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Market News and Trends, The Business of Real Estate

Home Improvements That Pay

The real world — not always what we wish or see on TV.  I am asked frequently about how much certain home improvements will increase the market value of a home, or for advice on which improvements are best.  My answer:  Make changes that you will enjoy, and plan to stay for a while to enjoy them.

Please, that’s not just me being flippant.  I find that expectations are routinely inflated.  Even in Austin and Central Texas — perhaps the healthiest real estate market in the United States — large investments in home remodeling are unlikely to yield large returns in the short run.  We have all been exposed over the past several years to a variety of television programs and articles about major home makeovers, prescribing significant home improvements that pay off the very next weekend with a profitable sale at an open house.  I suppose it is possible that in selected markets that enjoyed 10% to 20% annual price appreciation during the housing boom, and where any reasonably prepared listing could expect multiple offers, the market might have allowed meaningful gains on remodeling costs.  In the real world here, though, I find that more modest preparations make more sense for prospective home sellers.

Remodeling Magazine follows this information closely and publishes annual results of surveys on the subject.  Here is their look at cost vs. value for specific improvements to mid-range homes, ranked by “Cost Recouped” and focused on the Austin/Central Texas area:

Cost-Value Home Improvements - Mid-Range - 2009-2010

Surprised?  Replacing the front door or garage door are not on the list of improvements that my clients ask me about, but they are the only projects on this list that offer a realistic chance of paying you back more than they cost.  Kitchen and bathroom remodels — consistent recommendations on those TV shows — return about $3 out of $4 invested.

Remodeling an upscale home instead?  Here’s that data:

Cost-Value Home Improvements - Upscale - 2009-2010

This ranking is still headed by mostly “un-fun” home improvments.  The bad news is that only one project on the list returned more than $8 out of $10 spent on home improvement.

Note:  These are averages.  Some homes in some neighborhoods will benefit more than others from remodeling investments.  Generally, though, I find that if a homeowner plans to sell soon, money is best spent on mundane projects like storing excess furniture and knick-knacks, cleaning the house top-to-bottom, cleaning or replacing carpet, painting, mowing the yard, trimming trees and shrubs, and planting some color out front to improve curb appeal.  I also pay for staging most of my listings, with no doubt that it is money well spent.

Not planning to move right away?  Remodel to your heart’s content, knowing that 25% to 30% of what you spend will be left behind when you sell.  It is worth thinking carefully about whether you are the only family in the country who wants what you want in a home, but otherwise do what you will enjoy, and enjoy it.

About Bill Morris, Realtor

Many years of business experience (high tech, client service, business organization and start-up, including almost 20 years in real estate) tell me that service is the key to success and I look forward to serving you. I represent both buyers and sellers throughout the Austin metropolitan area, which means first-hand market knowledge is brought to bear on serving your needs. Learn more about my background and experience, my commitment to my clients, my profession, and to the real estate industry at


9 thoughts on “Home Improvements That Pay

  1. This is really informative post thanks for sharing…

    Posted by Austin Real Estate | April 19, 2011, 2:10 AM
  2. I agree 100%

    Posted by toasty redhead | May 14, 2011, 1:47 PM
  3. This weblog appears to get a large ammount of visitors. How do you advertise it? It offers a nice individual twist on things. I guess having something useful or substantial to give info on is the most important factor.

    Posted by Belen Burgos | May 15, 2011, 10:55 AM
    • Belen, thank you for reading and commenting. I trust that by writing what I find interesting I am covering topics that my clients and other readers enjoy as well. I have been very happy with the growth in readership. That growth is 100% organic — no promotion at all. I hope you will continue to read.

      Posted by billmorrisrealtor | May 15, 2011, 11:06 PM
  4. Hello! I love watching football and I loved your blog as well.

    Posted by football | May 16, 2011, 6:18 AM
  5. I have really enjoyied reading your well written article. It looks like you spend a lot of effort and time on your blog. I have bookmarked it and I am looking forward to reading new articles. Keep up the good work!

    Posted by Emily | May 16, 2011, 8:53 PM
  6. I especially agree with enjoying the improvements. In Austin I think there’s plenty of opportunities for energy efficient and eco-friendly cost-saving projects that can be rewarding for many Austinites, including myself. I’d be interested to see data factoring in tax and energy efficiency savings into the overall value of each project. It seems like if you want to enjoy your home improvements, one way to enjoy them would be by saving money and cutting costs in your home, and for future owners

    Posted by John | August 1, 2011, 10:57 AM


  1. Pingback: Home Improvements That Pay « Bill Morris' Austin Real Estate Blog | Market My Home Local - April 19, 2011

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