“I spent $50,000 on home improvements but my home’s appraised value only increased by $35,000?”
If you’ve been in the mortgage business, you’ve had to address or handle a question like the one above. As a capitalist society in the United States, we all want to see a return on investment! As a homeowner, when you do a home improvement you will increase the value of your home, however, it’s not typically dollar for dollar. So, spending $50k on finishing your basement, doesn’t increase your home’s value by $50k. Unless you are completing an above grade addition to your home, historical data supports that you’ll receive approximately 70% return on investment. Some items, such as landscaping and fences, return far less than 70%.
The key to home improvements is simple, do it for your enjoyment and not for a resale value. Remember, it’s called “HOME” improvements and not “HOUSE” improvements. It’s your HOME. The improvements you’re doing are for you/your family.
So, when you’re thinking about investing in your home, consider it to be investing in your level of enjoyment from your home and not just in the value. If you do that, you’ll always feel good about it!