Homeowners looking for ways of increasing their house's value need to look no further than the floor beneath their feet.
Refinishing a home's hardwood floors will bring the largest return on investment among the most common renovation projects undertaken by homeowners since the pandemic began, according to the National Association of Realtors 2022 Remodeling Impact Report.
Homeowners spent an estimated average of $3,400 refinishing their floors, and the project added an estimated resale value of $5,000 to the home, resulting in an eye-popping 147% return on investment.
Homeowners who decided to install new flooring also saw a very high return on investment, spending an estimated $5,500 on new wood floors but getting an estimated resale value of $6,500, or an ROI of 118%. Upgrading a home’s insulation was the only other project where homeowners recovered at least 100% of the installation cost in resale value.
Best home improvement projects for return on investment
The following home projects topped the list for highest cost recovery:
- Refinish hardwood floors: 147% return on investment
- New wood flooring: 118%
- Upgrade insulation: 100%
- Converting a basement to a living area: 86%
- Closet renovation: 83%
- Converting an attic to living area: 75%
- Complete kitchen renovation: 75%
- Bathroom renovation: 71%
- Kitchen upgrade: 67%
- New bathroom addition: 63%
- New primary bedroom addition: 56%
Why are floors such a good investment?
“For homeowners looking to sell, it is hard to deny the beauty of newly finished floors in videos and home listings,” Jessica Lautz, director of research for NAR, said in the report. “For owners planning on staying in their home, perhaps the feel is more hygienic during the pandemic.”
Projects that have traditionally been considered the biggest moneymakers when it comes time to sell your home, such as a complete kitchen renovation and bathroom remodels, had an estimated resale value of 75% and 71% respectively — not bad ROIs by any means.
Home improvement during the pandemic
Home improvement projects saw a big boost coinciding with the pandemic. An estimated $420 billion was spent in home remodeling projects in 2020 alone, as lockdowns and social distancing cut down on outings to restaurants and vacations were put on hold. The money saved was put to good use making our indoor life more comfortable and useful, notes Lautz, with renovations that added or upgraded spaces for home offices and areas for working out or attending virtual school.
“Homeowners embraced small changes to make their space shine, like painting and hardwood floor refinishing, but expanded into attics and basements to use every square inch possible,” said Lautz.
While most homeowners surveyed in the NAR report were planning on making home improvements regardless of the pandemic, 60% said they increased the scope of the remodel because of it. Another 86% said their initial remodel led to undertaking additional home improvement projects.
Lautz suspects owners will embark on more home renovation projects this year. Recent homebuyers will want to adapt their living space to fit their needs, and other owners may strategically take on cost-efficient renovation projects that help them get top dollar when they put the home up for sale in today’s hot market.
“For homeowners planning to sell, looking at the ROI can be crucial in understanding what to tackle and perhaps what to leave for the new buyer to take on and be able to customize,” Lautz said.
Home renovations that bring the most happiness
Besides looking at the economic gains of a remodel, the NAR study assigned a “joy score” designed to measure the happiness homeowners derived from each project, with a score of 10 bringing the most joy.
Not surprisingly, there were a lot more projects that brought a high degree of joy to the homeowner than there were projects that recovered more than 100% of their estimated costs.
Both refinishing and installing wood floors scored a 10 on the joy scale. A full 100% of homeowners say they have a greater desire to be at home since refinishing their floors, while 90% of homeowners have the same feeling after installing new floors.
Joining new floors at the top of the joy list were painting the home’s interior, adding a new home office and renovating a closet.