How Much Should I Consider Spending To Renovate My Home?


How Much Should I Consider Spending To Renovate My Home?
By Scott Rogers • November 26, 2024
With fewer homeowners looking to sell their homes and buy another, often because of their low mortgage interest rates on their current mortgage... some such homeowners may be wondering how much it is reasonable to spend on renovating their home. Here's one potential guideline to consider... and I'd like your feedback on it... Consider spending no more than 15% to 20% of your home value on renovations... knowing that you will likely only increase your home value by no more than 10% by making such renovations. Let's run a few examples... $400K home... consider spending no more than $60K to $80K on renovations... knowing that you will likely only increase your home value by no more than $40K by doing so. $600K home... consider spending no more than $90K to $120K on renovations... knowing that you will likely only increase your home value by no more than $60K by doing so. Multiple thoughts run through my mind, and may run through your mind, when considering these examples... 1. Where am I going to get $60K or $80K or $90K or $120K to make these renovations? Yes, a good point. These are intended to be theoretical maximum renovation budgets... but that doesn't necessarily mean you have those sort of funds on hand to make the improvements. The renovations that many homeowners make will be bounded by their overall financial picture, more than these hypothetical guidelines. 2. Why will your home value only go up by $40K if I spend $40K to $80K? Most renovation projects have a less than 100% return on the dollars you spend on that project. Renovating an older kitchen into a brand new kitchen will increase your home's value, but likely by an amount that is less than the total cost of your renovation. 3. Should I just sell my home and buy a new one instead of renovating? Probably not. When you consider the cost of selling, the cost of buying, the cost of moving, the cost of any improvements on the new house, and the change in mortgage payment based on current mortgage interest rates... most homeowners are better off staying and renovating rather than selling and then buying. If you want to dial in a bit further on what your numbers could or would or should look like relative to your current home value, how much you might spend on renovations and a post renovation value, just let me know. Receive Updates by Email Recent Articles: The Increasingly Difficult Challenge Of Purchasing A Detached City Home Is There A Price You WOULD Pay For This House? There Are Plenty Of Types Of Houses That Exist That Just Are Not Available To Purchase Home Sales By Price Range In The City Of Harrisonburg Are You Compromising On Aspects Of Your Next Home That You Can Or Cannot Change Later? How Much Slower Are The Winter Months In Our Local Housing Market? Rockingham County and New Home Sales Drive Surge in Area Housing Market Find The Balance Between Optimistic And Realistic Home Pricing Room Size Is Difficult To Understand Solely From Real Estate Photos
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Nov 27, 2024 (unless otherwise noted).
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