10 Home Improvements with the Highest ROI for 2022

10 Home Improvements with the Highest ROI for 2022

Even though the US economy took a hit in 2020 – shrinking 3.5% – American homeowners spent almost $420B on home improvement projects last year. Between renovations, gut remodels and minor updates, the average homeowner spent more than $13K on their home improvement project in 2020. This represents a sizable increase from the previous year’s average of just over $9k. While some homeowners undertake home improvement solely to improve the function or boost the aesthetic appeal of their space, others are laser focused on ROI. Either way, not all home renovations are created equal. Homeowners who plan to either refinance their mortgage, reduce their operating costs or sell their home in the near future should consider return on investment before pursuing projects. High ROI for home improvement projects means a significant percentage of the cost was recouped post-renovation. This could be achieved either through sale of the home, through savings or through some other financial benefit. From replacing your garage door to installing a whole home water filter, follow below for a list of ten improvements that instantly increase your home’s resale value.

What is ROI and How is it Calculated for Home Improvements?

10 Home Improvements with the Highest ROI for 2022

As mentioned above, ROI is an acronym for "return on investment." The best ROI home improvement projects are those that return close to 100% of the homeowner's original investment. Generally, it is quite rare to achieve a full return on one's investment from a financial perspective. One must also consider other types of gains. For example, upgrading the HVAC system in a home for a newer model could not only improve indoor air quality but also reduce heating and cooling costs. Improvements that have the most significant return on investment are typically those that improve the home's functionality, update older features, increase the home's square footage, make the space more cohesive or match current real estate market demands. Those that bring a home up to code can also boost the home's appraised value and thereby increase its future sale or refinancing value.

Alternatively, renovations that make the house more time-consuming, expensive and complex to maintain can bring down the home's value. Referencing data from Remodeling Magazine, Carl Vogel points to swimming pools as an example in his article "Home Renovations with the Best Return on Investment" for This Old House. Vogel notes that "swimming pools hardly ever return their cost, because a lot of buyers aren’t willing to shell out more for a house just to acquire what they consider a maintenance bother."

Where Your Home is Located and When You Want to Sell Affect ROI

Expected ROI also varies based on the home's neighborhood, region and local market. First, homeowners must limit their expectations based on the style, size and other features of the houses in their neighborhood when considering updates. For instance, a second story addition might recoup 83% of its initial cost in an East Coast neighborhood filled with split-level Colonials. However, you would not be able to expect that kind of return in a neighborhood populated solely by single-story houses. Homeowners should also consider the average cost of certain remodels in their area and whether a reasonable future asking price could actually make up the difference.

When you plan to sell could also play a part in your project's ROI. If the real estate market is a buyer's market, you might not recoup your investment. However, if the market is a seller's market in which buyers are competing against each other, you could near or exceed a 100% ROI. Market trends might impact ROI too. From square footage to interior design style, what buyers want in a home changes over time. In short, not all remodeling projects add more value to the home. If you are planning to sell in the near future, consult with your real estate agent to ensure high home improvement ROI before undertaking a major remodeling project.

10 of the Best ROI Home Improvements for 2022

#1 Finishing the Basement

10 Home Improvements with the Highest ROI for 2022

Remodeling projects that add functional space to a home typically offer high returns on investment. Finishing your basement is one example. In her article “10 Crucial Things to Consider Before Finishing Your Basement” for Better Homes & Gardens, Jessica Bennett writes that “finishing a basement can give the property's value a major boost.” Referencing data from Remodeling Magazine, Bennett notes that “the average return on investment for a basement project nationally is currently around 75 cents on the dollar.” Expected value is high because finishing your basement is “likely to add new functionality to your home: more bedrooms, more efficient storage, and more space to entertain.” 

Unlike in a kitchen remodel, buyers have low expectations for finished basements. As such, choosing high end appliances, fixtures and finishes is not necessary. Erin Eberlin explains in her article “8 Ways a Finished Basement Adds Value to Your Property” for The Balance Small Business. According to Eberlin, most homebuyers "are just happy to have a finished functional basement with heat, light and flooring.” To limit spending while maximizing ROI he recommends “saving money on the caliber of materials you are using compared to the finishes for the rest of the home.”

#2 Boosting Curb Appeal

10 Home Improvements with the Highest ROI for 2022

Because your home’s exterior is the first thing prospective homebuyers see, most renovations that improve the house’s curb appeal also offer great returns. A garage door replacement, new exterior paint, attractive fiber cement siding or stone veneer siding and verdant landscaping all offer high ROI. 

Repainting Your Home’s Exterior

Writing for Homelight in her article “Cost-Benefit Analysis: Should You Repaint Your House Before Selling?,” Erika Riley notes that many real estate agents recommend a fresh coat of paint before listing. Riley writes that “30.85% of real estate agents surveyed in HomeLight’s recent Top Agent Insights Report recommend sellers paint their exteriors.” Though Riley notes that “research indicates that exterior painting can provide up to a 51% return on investment…painting your exterior boosts marketability by improving your listing photos and enhancing curb appeal.” Prospective buyers who see a freshly painted house assume that home has been well taken care of and is in need of few fixes. 

Replacing Garage Doors

Choosing to replace your garage doors could not only make your home safer but also more attractive to modern buyers. In his article “High-End Garage Doors: Worth the Investment?” for Million Acres,  Matt Frankel, CFP writes that new garage doors really are worth it. Referencing data from Remodeling's 2020 “Cost vs. Value Report,” Frankel writes that “an upscale garage door replacement can be one of the best ways to add value to a property.” The report found that the average cost to replace garage doors “will add $3,491 on average to a property, for an average return on investment, or ROI, of 94.5%.”

Updating the Landscaping

According to HGTV, landscaping is one of few improvements from which homeowners can expect 100% return on their investment. The average homeowner spends just shy of $5,000 when updating their landscaping and most recoup this entire amount upon selling their home. In a post-COVID-19 world, owners might recoup above 100% after this home renovation as buyers are more interested in outdoor space.

Replacing Vinyl Siding with Manufactured Stone Veneer Siding

In the article “Does Re-Siding Your Home Add Resale Value?” for SF Gate, Terri Williams writes that “re-siding a home adds a significant amount of resale value to a homeowner’s property.” This is because replacing your home’s existing vinyl siding with stone veneer siding “adds to the property’s curb appeal and also helps to control energy costs.” Not only will the home look better, but it will also be better protected from harsh weather. 

Referencing data from The National Association of Realtors, Williams notes that “the decision to re-side a house has consistently increased resale value for homeowners.” Most homeowners – especially those in inclement regions – can expect a 92.1% return on this investment.

#3 Replacing Carpet with Hardwood

10 Home Improvements with the Highest ROI for 2022

Durable, attractive and easy to clean, hardwood remains the preferred flooring material for home buyers across the nation. As such, replacing carpet with hardwood in high traffic areas of your home could yield great returns when you eventually sell. Julie Ryan Evans elaborates in her article “The Best Flooring for Resale Value: Wood, Tile, Carpet, and Beyond” for Realtor.com. Evans writes that “some experts believe [flooring] may be the single biggest factor when it comes to your return on investment (ROI).” 

Quoting luxury real estate professional Stephan Burke, Evans writes that “‘flooring matters tremendously when selling a home [because] it immediately influences if the buyer will like the house as they walk into every room.’” While Evans acknowledges that “choosing the right floor isn’t always cut and dried,” hardwood typically offers the best returns. In fact, the average return on investment for hardwood floors is “about 70% to 80%, and wood floors can boost the sales price of your home as much as 2.5%.”

#4 Updating the HVAC System

10 Home Improvements with the Highest ROI for 2022

If your HVAC system is inefficient or outdated, you might consider replacing it solely for your own health and happiness. However, your real estate agent might also recommend updating your HVAC system because it could boost your home’s value. According to the National Association of Realtors, upgrading your HVAC system usually yields about 71% returns. In general, updating the heating and cooling systems of your home – which make it more comfortable and efficient – adds value. For example, Better Homes & Gardens writer Kristina McGuirk includes installing a radiant heating system in her list of “10 Must-Have Home Upgrades That Are Actually Worth It.” 

If you want to start small, McGuirk recommends adding heated floors to the “primary bathroom floor” as part of a minor bathroom remodel. Wellness design consultant  Jamie Gold notes that “‘whole house projects are worthwhile’” too. Installing central air is another way to boost your home’s value, write Allegra Muzzillo and Lauren Phillips in an article for Real Simple. Muzzillo and Phillips note that “adding central air to an average 2,400-square-foot house could cost upward of $10,000 and boost your home’s value by 10 to 20 percent.” Centralized air is much more energy efficient than single-window units, “making them less expensive to run” and less obtrusive to look at.

#5 Building a Deck

10 Home Improvements with the Highest ROI for 2022

As mentioned above, improving the functionality and appearance of your home’s outdoor space is usually well worth the money. Renovations that add living space to one’s home also pump up the property’s resale value. Building a deck is particularly desirable because it adds usable square footage for a fraction of what a true addition would cost. John Riha explains in an article for HouseLogic

Riha writes that “the national average for new construction costs…is about $85 per square foot…[but] the cost to build a wood deck is less than $35 per square foot.” Experts typically quote as high as 75% ROI for installation of a deck. However, Riha warns that “the return on your deck investment will vary according to the region in which you live.” For example, decks have higher ROIs “in the Pacific West, where…the outdoor living season is virtually year-round, making a deck a solid investment.”

#6 Installing a Whole Home Water Filter

10 Home Improvements with the Highest ROI for 2022

Of all the home improvements on this list, installing a whole home water filter likely offers the biggest bang for one’s buck. The Forbes article “10 Upgrades Under $1,000 That Increase Home Values” notes that “installing a whole-house water filtration system is a serious game changer.” This is because “additional filtering to remove pollutants and chemicals from our drinking water has become necessary in many cities across the U.S.” Instead of installing a whole home filtration system, “many homeowners have been dealing with the issue on their own.” Homeowners often choose to use “a clunky, refillable filtering pitcher or purchase drinking water in environmentally unfriendly plastic bottles.” However, homeowners can boost their home’s value, improve their health and “impress buyers” with a whole home water filtration system. As the Forbes editorial team notes, “it’s pure luxury, and this amenity will pay off now and in the future when it’s time to sell.” 

A low-maintenance option is the Pelican Carbon Series Whole House Water Filter System, which can filter 600,000 to 1,000,000 gallons of water over five years. According to reviewers, this system is not only incredibly effective at removing common chemicals and pollutants but also easy to install. Learn more about the Pelican Premium Whole House Water Filter System here.

#7 Making the Home More Energy-Efficient

10 Home Improvements with the Highest ROI for 2022

There are multiple ways to recoup investment in a home renovation. While selling is one option, another is to increase savings while you still own your home. Making your house more energy-efficient by replacing windows, adding solar panels and picking out new appliances can reduce your home’s operating costs. In her article “Make These Five Energy-Efficient Improvements To Increase Your Home's Value” for Forbes, Gina Michelle strongly recommends solar panels and efficient windows. Michelle explains that “depending on your local climate, [your windows] may be doing serious damage to your energy bills.” Replacing your current windows with energy efficient windows can not only “lower energy costs, but they can even eliminate hot or cold spots in your home.” 

Solar panels are another energy and money-saving upgrade. In fact, Michelle writes that “solar energy systems may offer the single biggest impact on your monthly energy bill.” Furthermore, when installed properly, “they can be a central feature when marketing a green home for sale.” Just be sure not to lease your home’s solar panels as prospective buyers might be forced by the lender to take over your lease. Replacing your washer dryer could offer a high ROI too. Writing for Apartment Therapy, Dana McMahan notes that “washers and dryers are often part of price negotiations in home purchases.” Quoting Ron Shimek, McMahan writes that “‘the best type to invest in is a high-efficiency, top and front-load washer paired with a matching dryer.’” Opt for Energy Star certified appliances wherever possible.

#8 Updating the Kitchen

10 Home Improvements with the Highest ROI for 2022

While major kitchen remodels offer limited returns on investment, minor updates are usually worthwhile. According to Zillow, the national average for a minor kitchen remodel is 81.1 percent while the average cost is $21,198. A full-scale kitchen remodel returns only 53.5 percent of the original investment. Usually, a minor kitchen remodel will include replacing countertops, adding energy efficient appliances, upgrading flooring and increasing storage. A minor remodel generally will not include major changes to electrical or to the floor plan, which could necessitate involving home builders or structural engineers. 

#9 Replacing the Roof

Though an expensive undertaking, replacing your home’s roof is likely to add to its value. In the article “This Renovation Offers the Most Bang for Your Buck, According to Real Estate Agents” for MillionAcres, Maurie Backman explains. Backman writes that while “replacing your home's roof may not be something you want to do, but from a financial perspective, it's worth spending the money.” According to the National Association of Realtors' annual Remodeling Impact Report, “the average cost of installing a new roof is $7,500.” The average return on this investment, however, is $8k. This represents an average ROI of 107%. Realtors frequently recommend that sellers replace their home’s roof before listing. Backman notes that “33% [of real estate agents] insist that replacing a roof actually helped close a sale.”

#10 Remodeling the Bathrooms to Be More Accessible

10 Home Improvements with the Highest ROI for 2022

Last on our list of high ROI home improvement projects is remodeling the bathrooms of your home to be more accessible. This is an especially good investment in the primary bathroom -- previously called the master bathroom or master bath. Homeowners who choose to remodel their bathrooms should do so with universal design in mind. According to Aly J. Hale in her article “The Best Home Improvements to Add Resale Value” for The Balance, “adding accessibility features to your bathroom…can add nearly $12,000 to your resale value.” These home improvement projects include “things like installing a curbless, walk-in shower, adding radiant-heat flooring, upgrading to adjustable mirrors and showerheads, and installing grab bars.” The Seller’s Guide “ROI for a Bathroom Remodel” from Zillow notes that universal design bathroom remodels offer an average ROI of 70.6%.

How Can I Finance My Home Remodeling Projects?

There are a number of ways homeowners can finance their remodeling projects, but the best option varies depending on each homeowner’s individual financial situation. First, homeowners can save on their own. Second, homeowners can apply for home remodel or home repair loans. Alternatively, homeowners can apply for a home equity loan or for a home equity line of credit – also called a HELOC. Cash out refinancing, credit cards and government loans are other possibilities.

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