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Which Remodeling Projects Increase Home Value Most?

Fireplace Addition

Fireplace Addition

As a builder, I’m frequently asked…which remodeling projects increase home value most?  Now is a great time to update your home.  The best contractors are available.  Material prices are competitive as supply has overshadowed demand.  Mortgage rates are at historical lows.  So how do you determine which remodeling projects will increase home value most?  What if you had a tool that would give you value estimates for adding a bath, fireplace or air conditioning?  Just recently, this tool has become available to the public.

The NAHB (National Association of Home Builders) has created what they call the Average Single-Family Detached House Price Estimator that allows you to plug in your home’s details and run different scenarios.  By changing one item in your home at a time, you can see how the value is affected.  We ran a sample to see which remodeling projects increase home value most.


Our hypothetical home is located in the suburban midwest, has three bedrooms, two full baths, is located in a good neighborhood and has 1350 square feet.  We plugged these numbers in to see which remodeling projects would increase your home value the most.  Below are the resulting value increases according to the NAHB House Price Estimator…


Add Full Bath: +$27,384/Approximate Cost: $6-10k

Add 1/2 Bath:  +$15,581/Approximate Cost:  $4-8k

Add Air Conditioning:  +$16,223/Approximate Cost: $3-4k

Add Fireplace:  +$17,430/Approximate Cost:  $3-4k

Add Bedroom:  +$5,947/Project Specific

Add 200 Square feet:  +$3,226/Project Specific


There are three remodeling projects that increase home value the most, giving you the biggest bang for your buck.  Based on the NAHB House Price Estimator, the value of your home increases more than the cost by adding a bathroom, fireplace, or air conditioning.  Obviously there are some limitations to these numbers.  First, the NAHB numbers are based on averages.  As we know, there can be considerable differences from one home to another in quality.  Our hypothetical sample home is based in the suburban midwest…which covers a whole lot of ground.  You also need to keep in mind our cost numbers are based on average quality finishes.  If you intend to use granite counters or custom cabinets…your costs will be higher…which could lower, or negate’ your increase in home value.


If you keep the limitations in mind, the NAHB numbers can be a great tool to decide which remodeling projects will increase your home value the most.  With the real estate market issues still lingering for the foreseeable future, remodeling your existing home to meet your family’s changing needs may be a great option for you.  If you would like more information on potential value for projects on your home, check out the Remodeling Cost vs. Value Report 2011-12 by Remodeling Magazine.


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Remodeling Your Bathroom: What to Do If Something Goes Wrong | Home Improvement | January 24, 2012 at 2:15 pm

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