Expanding your home's square footage by adding a room has the highest price tag. A kitchen remodel is typically more expensive than other rooms since it includes many appliances and heavy-duty materials. Basement and bathroom remodels are also pricier.
Cabinets are the most expensive part of a kitchen remodel, regardless of whether you are installing brand-new kitchen cabinets or want to refresh your old cabinets.
Kitchens and Baths. In the hottest housing markets, springing for a kitchen or bath remodel is a sure-fire investment, often returning more than 100 percent of the cost.
The typical cost to renovate a home is around $10–60 per square foot.
While a variety of factors impact a project's cost, you can use a rule of thumb to get a general idea of the required budget. Remodeling experts estimate a kitchen renovation costs around 15% of your home's value. So, if your home is valued at $200,000, the budget for an updated kitchen is approximately $30,000.
Always use the market value of your property as a starting point for calculating home renovation costs. As a general rule of thumb, the amount you spend on your renovations should not be more than 10% of the current market value of your home.
According to the National Association of Home Builders (NAHB), the kitchen is the most popular room to remodel.
The report predicts that renovation spending will drop roughly 14% from 2022 to 2023. The study projected that renovation spending would exceed $450 billion during the first quarter of 2023 but cool shortly thereafter, with owner-occupied housing stock to “grow only modestly” in 2023.
In conclusion, a kitchen remodel can be a significant investment, and it's important to understand which items are likely to take up the most of your budget. Appliances, cabinets, and countertops are the three most expensive items in a kitchen remodel, but they're also the most important for functionality and design.
CABINETS. The cabinets are one of the most attention-grabbing points of the kitchen, and that is why they usually cost the most of any part of a kitchen remodeling project. The average price for new cabinets to be installed is around $15,000 but can go much higher depending on the materials used.
For a $100,000 budget, you could do basic renovations, such as painting the walls, replacing the floors, and remodeling the kitchen and bathroom. However, it may not be enough for larger projects, such as adding a second story to your home or replacing the roof.
As you plan your renovations, keep in mind that the remodeling price tag for no single room, except the kitchen, should exceed about 10% of the house's current value. Kitchen renovations are more costly and, in some cases, can exceed 15% of the home's value.
The takeaway
Home renovation projects like replacing your roofing and siding are a surefire way to recoup nearly all of your investment. But, other projects—like building an addition for a bathroom or bedroom—might cost you more to complete than a buyer is willing to pay for.
Never underestimate the power of a well-designed kitchen and master bath. These two rooms are truly the make or break it rooms for prospective future buyers. Get it right for you, but build it with these resale thoughts in mind. Are you ready to design your new home?
The master bath might not see as much attention from visitors, but it's a prime spot for rest and relaxation. Second, kitchens and baths are the most difficult rooms to renovate. They are costly and require a lot of handymen and labor. These rooms also take time to remodel, and people can't be without them.
Most notably, light-blue bathrooms are a strong favorite that can result in a big return on investment for your home. Survey participants noted they'd be more interested in touring and buying a house with colors in home design that include a light blue bathroom—and willing to pay 1.6% more than expected.
How does having a shower or bath effect the resale value of a home? Generally, a bathtub is seen as more valuable in terms of resale value. This is because bathtubs are seen as more difficult and more expensive to install when compared to showers.
Usually, the most expensive part of a bathroom remodel is labor, tile work, and plumbing.
Spend on fixtures, save on furniture.
Everything that doesn't move is trickier so you want to get it right. I always encourage clients to take their time buying items that are large and important for a good overall design, like sofas, tables, TV units and furniture, especially if budgets get tight.
Here's a quick example: Say you recently purchased your house for $450,000, and you're remodeling your kitchen. Your estimate from the contractor for the project is $50,000. Your estimated ARV would be: $450,000 + (70% x $50,000) = $485,000.