Whether you want to fix a safety issue, increase your home’s efficiency, or add more comfort, there are plenty of reasons why you may want to remodel or renovate your home. But before you set out making upgrades, it’s important to consider the project’s cost vs. its value.
The 2022 Cost vs. Value Report
The 2022 Cost vs. Value Report provides data for 150 metro areas across the United States. The data was derived from an econometric model that used data from existing home sales and values, as well as local gross domestic product (GDP), among other factors.
We took a look at the 2022 Cost vs Value Report for the Chicagoland area. Here’s what we found:
Focus on exteriors
Real estate professionals say the first impression you make on a buyer can play a big part in a potential sale. This year, consider a façade facelift because 9 out of the top 10 projects with the highest return on investment (ROI) in Chicagoland are exterior projects.
With cold Chicago winters, home improvement projects that both improve your home’s exterior and its heating efficiency are high on the list. Exterior projects are not only practical in protecting your home from the elements, they also make your home more attractive on the market.
|Project||Job Cost||Resale Value||ROI|
|Garage Door Replacement||$4,303||$4,097||95.2%|
|Manufactured Stone Veneer||$11,897||$10,474||88.0%|
|Entry Door Replacement (Steel)||$2,472||$1,747||70.7%|
|Window Replacement (Wood)||$26,609||$18,518||69.6%|
|Window Replacement (Vinyl)||$23,048||$15,916||69.1%|
|Siding Replacement (Vinyl)||$23,798||$16,330||68.6%|
|Minor Kitchen Remodel (Midrange)||$34,001||$23,258||68.4%|
|Deck Addition (Wood)||$23,295||$15,298||65.7%|
|Siding Replacement (Fiber-Cement)||$28,012||$18,079||64.5%|
|Deck Addition (Composite)||$27,708||$17,140||61.9%|
Upgrade the kitchen
The only indoor renovation that makes the top 10 list on both the national and Chicagoland 2022 Cost vs. Value reports is a minor kitchen remodel. Nationwide, the average minor kitchen remodel can cost around $28,000 with an ROI of 71%. In Chicago, it can cost around $34,000 with an ROI of 68.4%.
While it might be tempting to completely gut your kitchen, smaller-scale kitchen remodels such as replacing appliances or painting cabinets can offer better value for your dollar. Why? Like a bath or master-suite remodel, redoing your kitchen is considered a “discretionary project.” That is, the updates are a matter of taste. It’s a lot easier for a new homeowner to come in and paint cabinets and replace hardware than have to change out retro-style appliances, for instance.
Add a deck or patio
Coming in at number 8 for project value recouped—both Chicago and nationwide—is a wood deck. Decks are a great way to add some usable space to your home and increase your resale value.
Just one year ago, the Cost vs. Value Report had a Chicago deck project costing $19,935. This year, that cost is $23,295—an increase of nearly 17%. Part of that increase is due to supply chain disruptions and the cost of lumber. Still, a wood deck has a nearly 66% ROI.
Number 10 on the Cost vs. Value Report is a composite deck. A composite deck in Chicago that costs $27,408 gets a $17,140 recouped value, or 62% ROI. While composite decks are more expensive than wood decks and the value recouped is slightly lower, they’re less maintenance.
Consider the rising cost of materials
It’s not just lumber; pandemic-led supply-chain disruptions have contributed to material costs increasing sharply the past two years. While the value of the projects listed have for the most part steadily risen year-to-year, cost has outpaced recent increases in value, bringing down project ROI. ROI for 15 of the 22 Cost vs. Value projects have declined from an average of 66.1% in 2019 to 58.93% in 2022.
Still, it’s important to note that despite the sharp increase for building materials in 2022, overall ROI declined just 1.2% from 2021 to 2022.
Looking to the future: The value of the home office
With more employees transitioning to work-from-home roles due to the pandemic, the desire for a comfortable home office space is becoming more and more important.
We’re predicting an increase in the cost vs. value for home offices, as well as spaces that allow us to “get away” while under the same roof—spaces like a home gym or basement media room, for example.
Is now a good time to tap into my home’s equity?
Now is a great time to tap into your home’s equity for a number of reasons. According to property analytics firm CoreLogic, home prices are up 20% since February 2021. What does that mean for you? It means you may have more equity to borrow against.
Similar to a credit card, A HELOC is a variable rate home equity loan that offers access to a line of credit that is there when you need it. If you’re thinking of making home improvements and want to be protected from a rising rate environment, consider a fixed-rate Conventional Equity Loan. With a fixed-rate Conventional Equity Loan, you’ll enjoy the security of one low fixed rate with a variety of terms available.
While a project’s cost vs. value is important to consider when remodeling or renovating your home, it’s just one of many considerations. At the end of the day, being comfortable in your living space is as good a reason as any to tackle that next project.
See if one of our low-rate home equity loans, cash-out refinance, or personal loans can help make your dream design a reality. Give us a call to schedule a free consultation with one of our Residential Lending Specialists: 1-800-323-2611.