People choose to remodel their kitchens for a variety of different reasons. Whether you're trying to update a few things in the kitchen or do a complete remodel of your current space, kitchen remodels are an investment. There's a wide array of things to consider before jumping into your next kitchen remodel. The most important being: Return of Investment.
Often times, people buy into a kitchen remodel because they "don't have enough space" or the kitchen is "outdated." They tend forget that the kitchen remodel is an opportunity to make money in the future and create a gourmet experience. You can usually trust your updated kitchen to boost the value of your home. However, that doesn't necessarily mean that you're going to sell your home for more than you bought it for.
Before we begin:
- Remodeling spending is expected to approach $340 billion in 2018, a 7.5 percent increase over last year, according to Harvard’s Joint Center for Housing Studies.
- More homeowners may be remodeling, but those that do extremely high-end projects are seeing less value in those remodels.
- The average payback in a home’s resale value is 56 percent of the cost of the remodel.
Things to Consider
1. Kitchen Remodel CostKitchen remodel costs can fluctuate depending on what work needs to be done along with the quality and quantity of materials being used for the job. The typical average for a kitchen remodel is around $25,006 or $150 per square foot. Most homeowners spend between $13,052 and $37,020 or $75 to $250 per square foot. This can vary depending on the type of home. Remodeling Magazine puts the national average for a midrange major kitchen remodel at $66,196 and an upscale major kitchen remodel at $131,510.
An updated kitchen can make your home stand out to prospective buyers, which can help you sell your home faster and for more money. However, you're not likely going to get back everything that you paid for upon selling your home. How much you decide to spend on the remodel can influence the amount you'll make as a return.
2. Home Value
When the time comes to sell your home, it's natural to think about all the renovations that could possibly increase your home's value. However, investing large sums of money isn't the wisest move if you want to see the highest return on your investment.
Buyers who are in the market simply don't expect everything to be in peak condition before moving in. Determining your homes value before planning your kitchen remodel is preferred in order to properly gauge how much you'll be able to spend on the remodel itself. The link below is a great resource to help you determine your homes value.
3. The Market
The condition of the residential real estate market is the number one determining factor when it comes to selling your home. Understanding what's going on in the housing market is crucial. Potential homebuyers shouldn't focus on national trends, as prices vary between states and even neighboring cities. Real estate prices tend to bounce back over time, even after a recession. That being said, a kitchen remodel has many varying components that can all fluctuate in value regardless of what the economy is doing.
4. Consider Your Location
Your home's location is important to consider before remodeling your kitchen. Maybe it's close to your job or close relatives, but when appraisers set a value on your home, they're looking at these three factors above all else:
- Quality of local schools
- Employment opportunities
- Proximity to entertainment, shopping, dining
If you live in a middle-class neighborhood and decide to renovate your kitchen to be more "upscale", you most likely won't see a high return on your investment due to your surrounding's demand. Buyers are attracted to particular neighborhoods because of the large group of homes that have similar price ranges to suit their budget.
5. Is it Worth it?
Deciding if a remodel is worth the money can be challenging, but finding data on projected remodel value is easy. Professional organizations like the National Association of Realtors (NAR) and Remodeling Magazine compile annual analytic reports studying national and regional statistics on which remodeling jobs are most popular and promise the highest ROI. If you're planning on investing in a kitchen remodel of your own, be sure to consider everything that goes into it.
Kitchens are usually remodeled for aesthetic and emotion reasons. Who's to say it isn't worth it if your new kitchen gives you more space to host family and friends? The return of investment is important, but so is your peace of mind and feeling comfortable in your own kitchen. Ultimately, the answer to this question is distinguished upon your best judgement.
There's no definitive answer to how much a kitchen remodel increases home value. Each remodel has a variety of factors that play into the return of investment on a case-by-case basis. Taking these factors into consideration and creating a sound budget is the best way to strategically plan your home remodel.
If you're planning on staying in your home and keeping the kitchen to enjoy for yourself, then you don't necessarily have to worry about the ROI right now. Having the kitchen of your dreams impacts your everyday. Remodeling your kitchen can still be a great investment for you and your family, even if you don't gain back all the money you've invested when you decide to sell.