Home Renovations That Add Value To Your Home (And Renos That Don’t)June 8, 2016
Home renovations are big business in Canada. It’s estimated in 2015, Canadians spent north of $50 billion to spruce up, repair, upgrade or expand our homes.
Why homeowners renovate
The 2014 Houzz & Home Survey (Houzz is a home remodelling and design website) suggests that increasing the value of the home is a key motivator for six in 10 Canadian homeowners. But not all renovations are created equal; if you’re looking to sell your home, some renovations will add value to you home while others may not.
Renovations that typically add value to your home’s resale
The Ontario Securities Commision’s GetSmarterAboutMoney website suggests that if you’re remodelling, then the following projects may help increase the value of your home.
- New or improved kitchens and bathrooms
- Lower-cost improvements like painting, new wallpaper, or flooring
- New windows or doors
- Basement renovations
- Renovations that involve making the home more energy efficient (especially if you’re able to take advantage of government rebate programs)
The costs of these renovations, it is estimated, can in part be recouped when you sell your home. The average rate of return on the cost for a kitchen or bath renovation is about 75-100%, lower-cost improvements roughly 50-100%, new windows or doors around 50-100%, a basement renovation approximately 50-75%, and energy efficient upgrades about 60%.
Renovations that may not provide you a return
If these renovations are on your to-do list, make sure you’re doing them for your own enjoyment because it’s possible you won’t get any of your money back when you decide to sell.
- Swimming pools
- Extravagant landscaping
- Hot tubs
The running theme for renovations that don’t add value, it seems, is all about personal preferences. Each of these renovations, if not favoured by the buyer, involve work and maintenance to upkeep. Many people would consider filling in a pool, may be unable to keep up with the landscaping required to keep a lush garden, or would have the hot tub removed.
Additionally, projects that are along the lines of maintenance will not add value either. Replacing an aged roof, HVAC system, plumbing or electrical fall under simple home maintenance and a buyer would expect them to be up-to-date and working.
- A final thought on renovations to possibly avoid
Be careful of over-improvement. How will your home now fit into the neighbourhood? A home now worth $100,000 more than the comparables in the vicinity will appear overpriced, no matter how nice it is. How does that fancy new kitchen fit into the rest of the home? Renovations should be consistent with the rest of the house, otherwise a buyer may look at it and see all the work that’s still left to be done.
Renovating? Call your home insurer
Before doing any major renovations to your home, make sure you give your insurance provider a call. This will help ensure you’re properly covered during the renovations and after they’re completed.
Renovations may increase your home insurance premiums. Your premiums may increase during the course of your renovations to cover additional risks, and they may increase after if your renovations have increased the replacement value of your home. But, depending on the renovations, they could also decrease. Upgrading an electrical system, for example, could lower your home insurance rates.
To find out more about how your renovations could affect your premiums, call your insurance provider before you begin. This will help you understand what is and isn’t covered while also making you aware of exactly what you can expect from your home insurance rates once your renovations are complete.