Over half of Canadian homeowners planned to do renovations last year, according to ReMax Canada’s 2021 Ren. Common motivators for renovating are necessity (such as safety concerns), lifestyle enhancement, or increasing the market value of the home. But is renovating your home a good investment?
Pros & Cons of Renovating
When it comes to renovating your home, there’s more to consider than money. The return on investment matters, but because your home is where you live and spend much of your time, other factors are important too. So, let’s look at the pros and cons of renovating your home.
Pros of Renovating
Buying a new home instead of renovating can be tempting, but there may be benefits to renovating instead.
It’s home. It’s familiar, and you’ve learned its quirks and how to make things work. Over time, you’ve adjusted your routines and your furniture and decor to fit this home, so it’s comfortable. Renovating your home allows you to stay where things are familiar, while making necessary changes or enhancements.
You already know the neighbourhood. You’re familiar with your local grocery store and you know all the quickest routes to get to your usual places. Maybe you’ve made friends with some of your neighbours. If your community has good schools, that’s an extremely important consideration when your household includes students. Renovating lets you stay in the same community.
Renovating your home gives you the freedom to make it exactly what you want it to be. You have control over everything. You can make it look how you want it to look and you can make any changes you need to make to improve the functionality of your home to fit your lifestyle.
Increased Home Value
In many cases, renovating your home can increase its market value. Planned carefully, renovations can give you a good return on your investment.
Reduce Energy Consumption
Renovating an older home can help you reduce energy consumption and save money on your utility bills. You can improve your home and do your part for the environment.
No Moving Expenses
Renovating instead of relocating saves you the hassle and expense of moving. Some moves can cost $10,000 or more. Does that seem high? Consider the cost of preparing your home to sell (such as home staging), real estate commissions, sales and transfer taxes, inspection costs, closing costs on your new home, and the cost of the move.
When you calculate the cost of a move, figure out what kind of renovations you could do for that amount. Depending on the renovations your home needs, it might be a better option to spend the money on remodeling instead of moving.
When the real estate market is hot, it can be challenging to find and buy a house before it sells. This can make the homebuying process long and stressful. When you renovate, you get to decide on the timeline.
Cons of Renovating
All those benefits make renovating sound like a no-brainer, right? But there are also disadvantages to consider.
There’s no getting around it. Renovating is inconvenient. It can be noisy and dusty, and you’ll likely have to move furniture and belongings out of the way temporarily. It’s simply disruptive to your normal routines.
Renovations are not without risk. Unexpected expenses are common, and when costly surprises happen, it can eat into your investment return.
Surprises & Delays
Making structural changes or ripping out old flooring can reveal pests or rot damage. Older homes may require building permits or updating to meet building regulations. Materials can be back-ordered. All of these are common renovation issues that you can’t control, but may have to face.
Which home renovations have the best ROI?
If you decide to renovate your home, you want to maximize your return on investment (ROI). These are the top 5 home renovations that pay off on the resale market.
Sixty-five percent of Canadian RE/MAX brokers claim that kitchen renovations yield the highest ROI. Eighty-seven percent of those brokers say a kitchen renovation is the most sought-after feature by homebuyers.
Bathroom renovations are a close second to kitchen renovations for ROI, according to RE/MAX brokers. Nearly 62% say homebuyers prefer bathrooms that are already upgraded.
Paint has an excellent ROI because it doesn’t cost much, but it makes a significant difference in the look and feel of the home. Typically, fresh paint can get you a 60% ROI.
If your home has wall-to-wall carpeting, replacing it with hardwood, LVP, or tile can be a good investment. Carpets trap smells and dirt and all kinds of nastiness, and homebuyers prefer the updated look of more modern flooring. Flooring can actually get you a 100% return on your investment.
Vinyl windows, a new roof, or waterproofing the foundation can draw a higher return, especially if your home is older. Homebuyers feel more confident knowing that flooding or leaks are unlikely.
5 Home Renovations That Add Value to Your Home in 2022
In 2022, there are certain features that may be more valuable than they were pre-pandemic. Our lifestyles have changed, so homes that accommodate those changes are worth more. Consider renovating your home with these features for a greater ROI.
1. Home Office
Working from home is here to stay. That means a laptop at the kitchen table doesn’t cut it anymore. Renovate your home with a dedicated home office complete with a door for privacy during video conferencing.
2. Outdoor Upgrades
Our homes have become our sanctuaries. Many Canadians have opted for staycations in recent years, so upgrading your home’s outdoor spaces can be a worthwhile investment. Consider putting in a new balcony or patio area, or installing a pool. See 10 Ways to Optimize Your Home for a Luxury Staycation for more ideas.
3. Transitional Spaces
Canada’s weather may cause you to hesitate before spending money on an upgraded backyard or balcony. What’s the point of investing in a space you only get to use for half the year, right? Instead, consider creating a transitional space that can be used in all weather, such as a sunroom.
4. Additional Dwelling Unit
An additional dwelling unit (ADU) is a large upfront investment, but it can seriously pay off. A finished basement suite or an apartment above your garage can become a rental property that pays for itself and eventually generates a healthy profit.
5. Sustainable Living
Eco-friendly living is the way of the future. Many of Canada’s new homes are being built with sustainable components and smart technology. Energy-efficient appliances, triple pane windows, solar panels, LED lighting, and reclaimed wood are all popular ways to make a home better for the environment.
Should you renovate before listing your home?
Is renovating right for you? The real estate agents at Vickie Cooper Realty Group can help you decide. We understand the real estate market in your area and can give you valuable information you can use to help you calculate costs and potential returns. Contact us today.