Many homeowners have used built-up savings during the pandemic to make improvements to their homes. All renovations are a worthwhile investment, as you and your family will enjoy the revamped space, but some add more value to your home than others, even if you are not planning to sell in the short-term.
When a potential buyer views a home for the first time, the one thing that stands out — for better or worse — is what the kitchen looks and feels like, given it is perceived as a gathering place and the heart of the home. This is why a kitchen renovation tops the list as the most worthwhile. Not only does it provide the greatest return on investment but it can increase a property’s value by up to 20%, according to a recent Royal LePage report.
Ranking second is a bathroom renovation, which has the potential to increase a home’s value by an average of 16%.
Basement renovations ranked third (finished basement) and fourth (basement apartment). Either has the ability to increase a home’s value by an average of 15%. This is largely because buyers are looking at multigenerational opportunities to live under the same roof — something a finished basement offers. Having a legal basement apartment is also enticing since it can help offset mortgage costs with a rental unit.
While updating the kitchen, bathroom or basement can increase your sale price more significantly, minor upgrades can be a simple and cost-effective option. For instance, window replacements and interior painting can increase the value of a home by an average of 13% and 12%, respectively.
Investing in a pool is considered the least beneficial renovation project, adding an average of only 6% value to a home. However, more Ontarians have taken the plunge and installed a swimming pool in the last two years, making it one of the most popular home improvement projects during the pandemic. In 2020 alone, the province’s Municipal Property Assessment Corp. reported a 53% jump in the number of permits issued for residential pool installations.
Despite data showing the clear value of renovations, a majority of sellers (59%) have been less inclined to upgrade their homes prior to listing since the onset of the pandemic, due to sustained seller’s market conditions.
Will this change if the market balances out?
The report found that sellers may choose to continue not to renovate because of recent increases in the cost of construction materials and labour, combined with the lengthened timeframe and logistics for delivery of goods and materials. But for those who don’t, you could be leaving money on the table instead of in your pocket.