It should come as no surprise that outdoor spaces are more valued than ever. The coronavirus pandemic sent us all home for a year, and being cooped up inside made us long for upgraded outdoor spaces.
The home renovation market boomed last year, and continues to flourish now, with outdoor renovations leading the list of the top value-creating projects. Eleven of the 12 leading investments were exterior home improvements, with the exception of a minor kitchen remodel, according to the 2021 Cost vs. Value report from Zonda Media, a housing market research and analytics firm.
Overall, however, homeowners are getting just a 60% return on their renovation investments. That’s down from last year and well below the decade-high of 71.2% in 2014, as the costs of renovations have risen sharply, for both materials and labor. Supply-chain disruptions from the pandemic and global trading tariffs have contributed to the cost increases.
“The trend of exterior replacements outperforming larger discretionary remodeling projects has been accelerated, no doubt, by a year in which Covid has made people reluctant to have contractors inside their homes but wanting to improve outdoor spaces,” said Clayton DeKorne, editor-in-chief of Remodeling and JLC magazines.
“Exterior façade facelifts improve the curb appeal and make a great first impression as buyers approach the home,” he said. “That translates to real dollars at the closing table, which is why we see such tangible returns on those investments.”
The majority of projects offering the greatest returns in resale value were related to curb appeal. Garage door replacement showed a 94% return on investment. Manufactured stone veneer came in second with a 92% return, and a minor kitchen remodel offered a 72% return on investment. Adding a back deck, highly popular with homeowners in the past year, gives a 66% return on investment for wood and a 63% return for composite.
Other projects with high returns include vinyl window and siding replacement as well as upgrading to a steel front door.
The report provides a glimpse into what is now popular, but the cost vs. value analysis is not all about popularity, especially given the soaring costs for materials such as lumber. The effect of the rise in material costs is shown across the board for all projects, with the return on investment for all projects down an average of 3 percentage points, according to the report. For wooden decks, that return is down over 10%, as lumber costs skyrocket over 300% from a year ago.
A minor kitchen remodel did provide high returns, but, surprisingly, major kitchen and bathroom remodels did not. The Zonda survey found that those projects tend to be too individualized and don’t offer broad appeal to buyers.
The value to the current homeowner, while not monetary, is extremely high, given all the nesting going on. That is why there are massive delays for new appliances and fixtures due to extremely high demand.