Home improvement and renovation projects are becoming increasingly popular as more and more people hang out at home. Spending on home renovations averaged $8,305 in 2020, up $745 from 2019. The most popular projects were bathroom and kitchen renovations. On average, homeowners spent $2,995 on each home improvement project.
And while they may have been fun, many are probably wondering if these projects were worth it financially and how much the renovations will increase the value of their property.
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In this report, we analyzed thousands of real estate listings in 10 of the country’s hottest real estate markets. The goal was to find out where remodeled or updated homes see the biggest increase in price per square foot. Before you begin, keep in mind that your own experience may vary depending on a variety of factors, such as the renovations you’re investing in and the age of your home.
Key points to remember:
• Dallas homeowners see the highest return on investment, with a 23% increase in value per square foot, followed by Miami and Houston.
• Riverside, California has the lowest renovation ROI, with just a 2% increase in value per square foot, followed by San Diego and Las Vegas.
• On average, the renovation increased the value per square foot by just under 13%, or $34 per square foot.
Cities with the lowest renovation ROI
Of course, not all markets are seeing such gains from renovations. In some cities, renovations offer little or no increase in home value.
If you want to remodel your home and live in one of these markets, fear not. You can use this data to ensure that your renovation costs are in line with the rest of the market and to ensure that your renovation expenses remain under control.
1. Riverside, California
Located south of San Bernardino and east of Los Angeles, home values are slightly lower than in other West Coast markets. The median sale price is $575,000 and homes spend an average of 24 days on the market.
Prior to renovations, Riverside homes are valued at $348 per square foot. After the renovations, that price increases only $9 to $356.82 per square foot. That’s a 2% growth.
With this data in mind, it is useful to apply this to the average Riverside home. Despite only gaining 2% in value from renovations, this still translates to an increase in home value of over $19,000. An average sized unrenovated home would sell for around $787,370. After the renovations, this value becomes $806,770.
Another city in California is next on the list. San Diego has expensive homes and a limited housing inventory.
Compared to Riverside, the average home is worth over $200,000 more. The median selling price is $805,000. In addition, the houses only spend 14 days on the market.
Unrenovated homes average $645 per square foot. Meanwhile, remodeled homes average $666 per square foot. This 3% increase equates to an additional $21 per square foot.
The next list sees the return of double-digit value increases after renovations. Home prices are lower than those of its California neighbors. The median selling price of an average home in Vegas is $375,000, and homes only spend 25 days on the market.
Looking at that number a little closer, unrenovated homes cost an average of $221 per square foot. After the renovations, homeowners can expect to see an average of $242 per square foot. That $21 increase equates to nearly 10% more of the home’s value.
For an average size unrenovated house in Las Vegas, it would cost $48,000 more when the house sells. Specifically, an unrenovated home would sell for around $499,320. With the renovations, that number jumps to about $547,615.
The Phoenix market is in a similar position to Las Vegas. With a population of over 1.6 million, this state capital also boasts a booming real estate market.
Like Las Vegas, the Phoenix market reflects renovation values more favorably than California markets. With a median sale price of $402,000, renovations improve home value by 10%. In fact, unrenovated homes cost an average of $258 per square foot. Compare that to $284 for remodeled homes, and that $26 upgrade starts to weigh on value.
For example, before renovations, an average-sized home would sell for around $582,980. With the help of a local kitchen remodeler, the home could appreciate over $58,000, all the way up to $641,555.
We return to the west coast for our final market. Seattle and other Pacific Northwest markets are known for their high values and cost of living.
Seattle features a median sale price of $790,000. With an average of just seven days on the market, it’s clear just how boiling Seattle’s housing market is. This high value also translates into a high square footage value, even before the renovations. An average home is worth $487 per square foot before renovations.
However, some home renovations can increase this value by $551 per square foot. That’s $64 per square foot, a solid 13% increase in price.
Specifically, an average-sized house in Seattle will sell for $1,101,650 before renovations. That’s an impressive number, indeed. However, renovations could add an additional $144,000 to that value, as renovated homes average around $1,245,995.
5 cities with the highest renovation ROI
The following five cities offer the highest return on investment for home renovations. The good news is that despite the high cost of living in many of these cities, the value of a home will show impressive growth, especially with well-implemented and well-researched renovation projects. You can draw inspiration from the following for your next project:
The Dallas/Fort Worth real estate market is one of the largest in the country. The median sale price is $385,000 and homes spend about a month on the market.
On average, unrenovated homes cost $203 per square foot. In contrast, remodeled homes cost an average of $249 per square foot. That’s a nearly 23% increase in value, or $46 per square foot.
To break this down a bit further, we also considered the average square footage of homes completed in 2020. In the Dallas/Fort Worth market, that average is around 2,260 square feet. With these numbers, we find that an average size unrenovated home would sell for around $459,210. Meanwhile, a renovated home would sell for around $563,600, which means a renovation could help increase the value of your home by over 0,000.
Although not as booming as Dallas/Fort Worth, Miami is another real estate hotspot. The homes have a median sale price of $415,000 and they stay on the market for 52 days, nearly double that of the Dallas-Fort Worth market.
On average, remodeled homes are worth $362 per square foot. Meanwhile, unrenovated homes cost $300 per square foot. This difference of $62 indicates an increase of nearly 21% in the value of home renovations.
An average-sized home in Miami would be valued at around $678,280 before any renovations. After the improvement projects, this value jumps to approximately $819,255. In other words, home renovations can add another $140,000 to the value of your home.
The next entry takes us back to Texas in the most populous city in the state: Houston. Compared to the other cities on the list, Houston has relatively low average home values. The median sale price is $284,900 and homes only spend 19 days on the market.
For an average-sized home in Houston, homeowners are looking at a value of $142 per square foot before any renovations. After the renovations, this figure increases to $167 for an increase of 18%. That extra $26 per square foot might seem like a small amount, but on average, it adds up to more than $57,000.
Specifically, average-sized Houston renovated homes are worth $378,695, compared to roughly $320,885 for unrenovated homes.
4. Tampa, Florida
The fourth list is another one of the largest cities in Florida. The median selling price of Tampa homes is $334,900. Unlike Miami, homes in Tampa disappear in the blink of an eye, spending 11 days on the market.
In Tampa, renovations result in a nearly 15% increase in value. Listing unrenovated mid-size homes for around $495,705. Meanwhile, remodeled homes are selling for around $568,800. That’s an increase of over $73,000. Per square foot, this equates to an additional $32, as the price per square meter drops from $219 to $252.
5. Nashville, TN
The fifth highest ROI is in Nashville, another booming market with 1,314 listings this year alone. Sales are also fast, with homes spending just 29 days on the market before selling at a median sale price of $381,000.
In Nashville, renovations lead to a 14% increase in home value, from $235 per square foot to $269. It’s an extra $34 per square foot.
An average-sized home would sell for around $531,675 before renovations. After renovations and upgrades, that same home would sell for around $608,800, bringing in over $77,000 in additional value.
Considerations when renovating your home
Regardless of the market, renovations add value to the home. Even if you’re not looking to sell, renovations can help you create your dream home. If you need help planning your next project, find a home improvement professional near you.
Methodology: Using Redfin.com, we analyzed real estate listings in 10 of the hottest housing markets in 2021, according to Zillow.
The homes analyzed were single-family homes with at least two bedrooms sold within the last three months. Houses built within the last 10 years were excluded.
Regarding the number of registrations, we analyzed:
• Dallas/Fort Worth: 1,053
• Miami: 787
• Houston: 1,346
• Tampa: 898
• Nashville: 1,314
• Riverside: 400
• San Diego: 968
• Las Vegas: 1,258
• Phoenix: 1,240
• Seattle: 911
To analyze the average cost per square foot in remodeled homes, we looked exclusively at listings containing keywords such as “renovated,” “updated,” and “renovated.” To analyze the average cost per square foot of unrenovated homes, we looked exclusively at listings that featured keywords like “maintained” and “potential.” We looked at lists containing both types of words and categorized them correctly.