Hardwood Floors Could Be Your Best Investment

If you’re a homeowner, there’s a good chance you’ve tossed the idea of renovations around. From a quick inside paint job to adding a whole new room, the scope of remodeling projects can actually affect your return on investment (ROI). So if you’re debating which project could be worth your while to get started on, keep reading. 

What’s ROI? A quick breakdown.

If you’ve made it this far, then you’re probably familiar with ROIs, but let’s do a quick breakdown. First, a return on investment is a way to evaluate the profitability of an investment, like buying a house. The formula is simple.

ROI = (Income from Investment – Cost of Investment)/Cost of Investment

A positive ROI is great, a negative ROI implies a net loss. When it comes to housing, most real estate investors aim for ROIs above 10%. You can take a deeper dive into the calculations here!

The NAR Remodeling Impact Report

In 2020, the National Association of REALTORS (NAR) Research Group sought to discover what home renovations were actually worth it, based on time, expense, and joy scale. They just released their findings in the 2022 NAR Remodeling Impact Report. But if you don’t have time to fit a 60-page report into your day – don’t panic. Here’s everything you need to know. 

In 2020, Americans spent $420 billion dollars on remodeling their homes. The pandemic definitely had an effect on those willing to renovate – citing 60% of projects increased either in scale or remodeling more than one room in direct response to the pandemic. 

“While most consumers (83 percent) cite they would have remodeled regardless of the pandemic, 86 percent of consumers report remodeling one area of their home made them want to then remodel other areas of their home,” the report explains

Excitingly, after remodeling, the NAR reports that 84% of homeowners have a greater desire to be in their homes, so the changes clearly made an impact. Over half felt happy to see their completed project, earning a Joy Score of 9.6. Just under 70% felt a major sense of accomplishment just thinking about their completed project. 

Analyzing Interior Projects

In the report, the NAR looked at 19 different remodeling and replacement projects and calculated how much appeal each project is likely to have for buyers, as well as how much homeowners can expect to recover on the cost if they sell their homes.  

For interior renovations, they looked at

  • Attic conversion to the living area
  • Basement conversion to the living area
  • Bathroom renovation
  • Complete kitchen renovation
  • Closet renovation
  • Hardwood flooring refinish
  • Insulation upgrade
  • Kitchen upgrade
  • New bathroom addition
  • New primary bedroom suite
  • New wood flooring

It turns out, a hardwood flooring finish had the highest cost recovery of all interior projects, coming in at 147%. That was shortly followed by a new wood flooring at 118% and an insulation upgrade at 100%. 

So if you’re thinking about taking on a project, hardwood flooring finish could be the place to start!

The NARI Remodelers cost estimate came in at $3,400, with the Realtor’s estimated cost recovered at $5,000 – making a 147% value recovered from the project. Even better, 100% of consumers reported having a greater desire to be home since completing the project, 64% say they have an increased sense of enjoyment while they’re home, and 64% feel a major sense of accomplishment when they think about the project. 

Overall, this got a joy score of 10 on their scale, and a quarter of Realtors recommend doing it before selling. 

Time for a refresh?
If it feels like it’s time to give your home a little extra loving, the upcoming fall and winter months are a great time to take on interior projects. Contractors are in less demand and can work around your schedule with more flexibility, there are fewer outdoor activities taking up your time and even having a source of accomplishment to motivate you can be beneficial in the change of season!

If you’re not sure where to start, check out the full NAR 2022 Report for a deeper dive into potential renovation costs, joy scales, and of course, ROI. 

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