If you’ve ever wanted to renovate your kitchen, re-do the floors, or go full Joanna Gaines on your home, you’ve likely indulged in a little self-justification, claiming it would “improve the value” of the house. But getting a real return on investment doesn’t just mean slapping on some shiplap or getting the latest high-tech bathtub. A new Realtor study lays out the numbers.
Before you plan to build an addition to an undersized abode, consider this: Smaller homes are now appreciating faster than large ones. According to the analysis, which looked at millions of listings between 2011 and 2016 and calculated the annual price growth rate of homes with particular features, houses under 1,200 square feet have appreciated at 7.8 percent over the last five years, that’s twice the rate of homes larger than 2,400 square feet. The analysts are pretty sure this is due to baby boomers downsizing while millennials are seeking less expensive starter homes. That demand is driving up prices. Similarly, two-bedroom homes increase in value noticeably more than five-bedroom homes.
Itching for a new renovation project this season? Think about knocking down a couple of walls. The study found that homes with open floor plans appreciate 7.4 percent a year. Other value-boosting home features include an outdoor patio, hardwood floors, and a fireplace. Modern and contemporary-style homes also do better than older, more traditional architecture. Get the details here.