Home Improvements Should Grow Home Equity
Most of us that own a home have read with interest the articles that show up as regular as the crows this time of year. These stories generally outline the value of various types of home improvements, and typically rank them in some sort of order indicating the expected percentage of return on investment for everything from simple painting to a new pool. This is useful information, and certainly worth consideration prior to embarking on a major expenditure. However, like most generalizations, there are several factors at play that make a simple list of percentages a very rough guideline at best. Let me try and add a bit more depth to this line of thinking.
Most importantly, don’t take any value percentage list of this type literally. Every home, neighbourhood, and market is unique; so there is no way a general list can be accurate for each application. In my opinion, the best source for real life, real time information is an experienced realtor who is active in your neighbourhood. He or she can tell you what they are finding when showing homes for sale in your area, and what prospective purchasers are looking for. This changes dramatically all the time, is incredibly fluid depending on the age and culture of home buyers, plus strongly influenced by current market conditions.
A few years ago a kitchen upgrade was an automatic choice in any older home, and still is very appealing. However, with the high prices in our current market a ‘mortgage helper’ legal suite may be a better choice in some instances. Another major change that has an impact on almost every purchase today is the practice of acquiring a home inspection. A good inspector will bring attention to things like the age of the roof, storm drains, furnace, windows, etc. Often, a prospective purchaser will over-value the cost of having to replace these items when considering how much to pay for the home. On the other hand, if these sorts of upgrades have been recently done, the home not only looks more modern, but this indicates that the current owner is someone who looks after the place and does maintenance as required.
Most of us are not considering updates to our home for the purpose of increasing its value prior to placing it on the market. We are planning to continue to live in the home but want to feel that money we are spending to improve it will somehow come back to us in the future, at least in part. This is sound thinking, and certainly helps us justify improvements. A fair way to look at this is to understand that we haven’t really spent the money but used it to increase the equity of our home. We get to enjoy living in our improved home, and ideally will recoup most or all of our investment at some point in the future when we eventually move on. The key is being smart with the quality and type of upgrades we choose to undertake. I know for a certainty that there are homes we have done work on that are worth far more the day we finish the project, even when considering the cost of the work. This is especially true when the upgrades enhance a view, brighten up a dark area, or generally add an updated modern look which dramatically improves the curb appeal. Imagine the joy of coming home each day to a new look that makes your home more comfortable and valuable at the same time. It’s a great feeling!