Should I spend a third of my home's value on a renovation in 2022/2023

last year

With the slump in real estate and the reality that interest rates will keep increasing should I spend a lot of money on a major renovation? Is a local realtor the best person to give us a honest and wise opinion?

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Louise Smith

last year

last modified: last year

We did a major renovation because we are living in the house, and we wanted it changed. Unless you plan on selling soon, spend your money on things that give you enjoyment. If it's a new kitchen, go for it. If it's a spa bathroom, enjoy the water. I refuse to live my life waiting for something to happen. I'm not going to continue to live with a dowdy kitchen and then renovate it for selling. I pulled the bathtub out of the guest bathroom because my guests don't take baths; they take showers and much prefer a step-in shower. If it "hurts" resale price, so be it. Meanwhile, my guests are happier. I may be dead before the house gets sold. Can't worry about resale and strangers.

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Comments (9)

Sigrid
last year
If you have the money, are doing the renovation to please yourself, and plan to live in the home for a long time, then the market conditions don't matter. If you're thinking of doing this to enhance the value of your house, then you really need someone who can advise you.

You can do comparables yourself. Look at real estate listings in comparable neighborhoods. Make a spreadsheet or just jot down notes. How much more do houses with the features you're thinking of adding sell for compared to those without them?
D Bee thanked Sigrid
K R
last year
A lot of factors here. How long are you looking to live in it before selling? At this point with the real estate market slowing and will continue to slow, I personally would not spend it if you’re not willing to stay in it another 5+ years, unless you don’t care about getting some of the money back (you’ll most likely never get it all, regardless of the market). We did a whole home renovation, no walls removed or plumbing changed but everything else in 2018, and we spent approximately 50% of our home’s value at that time. We had no intentions of moving but knew we wanted to after our kids left the house (we did the renovations for ourselves to enjoy). It ended up working out for us, as we just sold it this year and “got back” all of the money we spent plus some. But it was just good timing - nobody has a crystal ball to tell you what will happen when and we sure as hell didn’t know Covid would hit and the market would go through the roof. Look at the comps in your neighborhood and look at your own personal picture and then make that decision.
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That is a really tough question with no definitive answer. How much you spend depends so much on what part of the country you are in and what you are having done. There is a big difference between re-doing your counter tops and adding a backsplash vs. tearing down load-bearing walls and adding onto a home. In the first case, you can easily do a kitchen update for less than 10% but if you are doing anything major with structural changes, you are going to be over the 10% mark. I think for anything major, there is a baseline of what that costs, regardless of the value of the house so as a house's value increases, perhaps you are more likely to be able to do a renovation for 10-15%. For example if your house is worth $750k, sure, maybe you can do some major renovations for $75k and be at the 10% mark. Whereas, if your house is worth $150k, and you do something major, it is still going to cost a minimum of $30k, which would be 20% in the case of the less expensive house. All that to say, we spent a lot on our kitchen remodel, probably 25-30% of its value. It was however a major renovation/addition - adding approximately 14 x 16 feet of space on two levels, and a screen porch too. That being said, we don't think we will ever "get our money out of it" and we knew this going into it. But we didn't do it for resale - we did it for ourselves and intend to enjoy it for many years to come.
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D Bee
Original Author
last year
K R - thanks for sharing your experience. We are not planning on moving baring any radical change to our lives. Certainly we will be here 5+ if we significantly expand our living space. Congrats on getting your investment back --- 50% of your home's value, wow! Comps in our neighborhood are difficult because its pretty eclectic. I think I will cold call a long established realtor in the area before we go to much further.
elcieg
last year
You never mentioned what the major renovation is.
HU-765755942
last year
Right, it depends what room, and what you are doing. For example, a full kitchen Reno will get less roi than partial. And bedroom Reno even less.
D Bee thanked HU-765755942
violetsnapdragon
last year
I'm only a fan of remodeling when I can do it for cash. I'm not a fan of refinancing or borrowing money for cosmetic changes. If the value of houses drops, you could owe more money than the house is worth.
PRO
Bergen Furniture & Design
last year
If you plan to stay in the property for a long time and renovation is your top priority, it doesn't make sense to incur additional costs for an expert opinion. Home is the place where your comfort and peace lies, so go ahead and make it an ideal abode according to your taste and preferences.
Travis Johnson
last year
It depends on many factors.

Where I live the housing marketing is still gang-busters, and house prices are rising as the influx of people continues to arrive here.

I am in the same situation as you, and I plan on renovating my latest house purchase. It will not be 50% of the home's value because I will do all the work myself, but should let me double my homes value in a few years time.

By then? Who knows, if the market slumps... even here... it should recover by then, and by then I will be ready to retire anyway, get rid of this extensive home, and buy a condo or something where I can live out my days in ease.

Should I spend a third of my home's value on a renovation in 2022/2023

Louise Smith

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