Ah, the sweet sounds of summer: hammering, sawing, digging, demolition. Well, they’re not sweet exactly, but certainly familiar to anyone who lives in one of Canada’s larger cities. With real estate prices in a state of flux, it seems everyone is eager to spruce up what they’ve got and hopefully be rewarded with an increase in property value. However, as we know, not all renovations are created equal. Just because you’re sinking the money into your home doesn’t mean you’ll see a return on your investment. And just about everyone has an opinion on what you should and shouldn’t be tearing out.
I came across a handy-dandy online tool offered by the Appraisal Institute of Canada, which can help you determine how much of a return you can expect to get out of your home renovation. (The AIC is a self-regulating professional association and the largest property valuation organization in Canada, with 4,800 members in Canada and around the world.)
Choose a reno, plug in your expected cost, and it will tell you how much of your investment you can expect to get back. For example, if you spend $25,000 on a kitchen reno you are likely to get 75 to 100 per cent of that investment back when you sell, or $18,800 to $25,000.
Clearly, these are general guidelines, not hard and fast rules, and how much you spend will affect how much you get back. If you blow $70,000 on a fabulous bathroom job in a house that’s only worth double that, you’re unlikely to ever see a dime of that money again. In addition, choosing a renovation should be about more than just return on investment – it is your home, after all, and any work you do should also be for your enjoyment. But if you’re mulling over one job versus another and you’re looking to sell soon, it might be prudent to go for the basement reno over the swimming pool (see below).
Some of the big winners are obvious (bathroom and kitchen renovations appear to give the biggest bang for your buck), but there were others that were more surprising to me (only 25 to 50 per cent return on landscaping? Say it ain’t so).
Here’s a look at the return on investment you can expect from 25 of the most popular home renovations, according to the Appraisal Institute of Canada:
Bathroom and kitchen renovations are the real winners, providing a return on investment of about 75 to100 per cent, followed closely by exterior or interior painting at 50 to 100 per cent.
Other safe bets include basement renovation, garage construction, window/door replacement, rec room additions and fireplace installation, which return about 50 to 75 per cent, as do exterior siding and upgrades to flooring or furnace/heating systems.
You can expect a slightly lower return on investment (25 to 75 per cent) with concrete paving and roof shingle replacement, as well as installing central air conditioning or building a deck.
The lowest return on investment comes from landscaping, asphalt paving, building a fence or interlocking brick walkways, or even installing a home theatre room, which all return about 25 to 50 per cent. The home renovations that are least likely to increase property value are skylights, whirlpool tubs and swimming pools, which return between 0 and 25 per cent.