Top improvements that increase home value based on market data

Top home improvements that add the most value

These are the top renovation, remodeling, and home improvement projects that increase home values based on Opendoor’s data on thousands of recent home sales. We studied 11 projects and ranked them by the average value increase across the cities where we buy and sell homes. We assume the median home price in each market.

Data represents the average increase in resale value for median-priced homes across all 20 markets currently served by Opendoor. Home price data via the National Association of Realtors (NAR). Opendoor data updated August 2019. By referencing Opendoor’s home improvement data, you agree to cite Opendoor as the source and link back to this page.

It’s easy to start thinking… “Woah, adding a bedroom could increase my home value 6%, I’m going to add six bedrooms!” Unfortunately, many projects have diminishing returns, meaning the more you add doesn’t mean the more value you gain. The above chart shows the value of doing one remodeling project to the median home in each of our markets.

Ultimately, the amount of value a project adds to your home will depend on the home’s location and current value.

→ Learn more about how Opendoor calculates your home value.

Considering a home improvement project?

We’ll dive into pricing trends for the top 5 home improvements that can increase your home value below. Jump ahead to learn more about a project that interests you:

1. Add a pool

2. Finish a basement

3. Add a bedroom

4. Add a full bathroom

5. Add living space

Will adding a pool increase my home value?

Adding an in-ground swimming pool can add 7.3% to the median home value, according to Opendoor data across 20 cities. This is an estimated dollar increase of about $21,700 at resale.

Adding a pool is a great example of how the value of a project varies based on price and location.

In Southern markets such as Tampa, Jacksonville, and Austin, the higher the home value, the more value a pool can add. The opposite is true in the West Coast markets of Los Angeles and the Inland Empire where adding a pool results in slightly less value as the home price increases.

One reason for the trend could be the high cost of living in West Coast markets. The added expense of maintaining a pool could make homes less desirable to budget-strapped buyers.

How much will finishing a basement increase my home value?

Finishing a basement can increase the median home value by 6.6% based on our data across 20 cities. That’s an estimated dollar increase of $21,786 at resale. We define finishing a basement as 700 square feet of basement space with added insulation, drywall, lighting, and an emergency escape window or door.

When rented out to vacationers or a long-term tenant, a finished basement can also generate income, making it a very attractive amenity for buyers. However, we found its value to be highly location-specific.

For example, Portland has many historical Victorian and craftsman homes, which may be why the coveted basement hang-out has such a large increase there. In fact, it has one of the largest increases among lower-priced homes we observed in our data, adding north of 15%!

Should I add a bedroom to my home?

Based on our data, we found that, all other things being equal, your home value has the highest increase when adding a second or third bedroom. The data also shows that adding up to a 3rd bedroom can have an average increase of 6.2% for the median home. That’s an estimated dollar increase of about $19,813.

We define this project as adding a 2nd or 3rd bedroom that increases the above-ground living space of your home by at least 150 square feet. Typically bedrooms must have a closet, window, and door.

With an average price increase of more than $50,000, adding up to a third bedroom to a median-priced home in Los Angeles results in the highest value gain of all the remodeling projects we studied.

It’s not just that square footage comes at a premium since adding living space generates more value in Tucson and Sacramento than in L.A. It’s more likely that adding a bedroom is particularly valuable in denser metros. For example, Los Angeles has one of the highest number of persons per household in the country.

Should I add another bathroom to my home?

According to Opendoor’s data, adding a full bathroom can increase the median home value by 5.7% on average, which is a dollar increase of about $17,638. We define adding a full bathroom as converting existing space to include a shower, sink, and toilet. We assume no change to total square feet.

Between adding an additional full bath, putting in a half bath for guests, or just dressing up an existing space, it comes as no surprise that adding a full bathroom creates the most resale value on average.

What might surprise you is that remodeling an existing bathroom creates nearly as much value as converting one from scratch in many metros.

The difference in the resale value added between a full bath conversion and a full bath remodel in Minneapolis, for example, is a few thousand dollars. In Atlanta, however, adding an entirely new full bathroom can have a higher increase than adding a pool or a bedroom.

Should I add more interior living space to my home?

Adding living space can add 5.3% on average to the median home value, according to Opendoor’s home improvement data. That’s a dollar increase of about $16,628. We define this project as the addition of 150 square feet of above-ground living space.

In most of the markets we studied, adding a bedroom creates more value on average than expanding the living area. But in some metros, such as Austin, Denver, and Tucson, a larger living room or an additional family room actually creates more value than a bedroom.

In Sacramento—our top city for adding living space—expanding the interior creates about the same amount of resale value as adding a bedroom, regardless of the current home value. While it’s true that, in general, bedrooms demand a higher home sale price, adding more usable space in the home can be a wise investment, especially for big families.

→ Compare the costs of selling to Opendoor versus a traditional home sale

How to choose home improvements with the best ROI

It’s important to remember that “adding value” is not the same as return on investment (ROI). Understanding how much a project could potentially add to your home’s resale value is the first step in determining whether or not the investment will pay off. The second step is understanding the cost.

In Phoenix a kitchen remodel can add $23,000, but the median cost of renovating a kitchen is about $15,000, according to the most recent American Housing Survey. Local costs will vary, but in the context of ROI, this means the net return on remodeling a kitchen in Phoenix would be estimated at just over $8,000.

How to calculate the ROI for a kitchen remodel

Estimating the value-added before taking on a project makes it easier to negotiate with contractors and to understand whether or not it pays to invest your time and money.

Even if the ROI of a project is negative—as it might be for more expensive homes—you’ll also want to consider how much you’ll enjoy the upgrade yourself and you soon you plan to sell, whether that’s weeks or years away.

While some homeowners want to maximize ROI, others may prefer to increase the quality of life in their home.

Takeaways

• Your location and current home value are important factors to consider when deciding which project will create the most resale value.

• While remodeling tends to create more value among less expensive properties, some projects—like adding a pool in Austin or an attached garage in Tampa—actually produce more value for higher-priced homes.

• Don’t forget that the value added is not the same as ROI. Subtract the cost of a project from the expected home value increase to gauge whether or not it will result in a net gain.

Further reading