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According to Fixr.com's Remodeling 2023 Cost vs. Value Report, an HVAC electrification conversion is the home remodeling project with the highest return on investment in 2023, with 103.5% of its costs recouped from resale. Fixr.com has created original graphics that show all the projects included in the report, along with their associated costs, recouped value, and ROI percentage. The report also shows which remodeling jobs had the biggest increases in ROI over the past year.
Research showed the home remodeling industry has been predicted to reach a market size of $485 billion in 2023, as Fixr.com compared the previous year's projects’ ROI along with their total costs.
What stands out in the findings is the fact that the cost of the project isn’t necessarily linked to its ROI, so investing in the most expensive home remodeling project may not guarantee the highest recouped value. In fact, the most affordable project featured in the report was an entry door replacement, yet it’s amongst the top three home remodeling projects with the highest ROI of 2023. This shows that even a small investment in improving a home can lead to a large return.
Meanwhile, statistics tend to show that the more money spent on a home renovation, the higher the resale value. A primary suite addition costing over $325,000, for example, could potentially add a resale value of over $73,000 to the home.
According to the report, a total of four projects are said to have an ROI of over 100% in 2023. This level of return has not been seen since 2017’s Cost vs. Value report when fiberglass attic insulation reached a recouped value of over 107%. This not only means that the entirety of the costs of these projects can be recouped upon resale, but those who invest in them may even see a profit, although it may be relatively small.
HVAC electrification tops list of ROI
This year’s most profitable home remodeling project is predicted to be HVAC electrification, with the average costs of $17,747 for this project potentially being recouped by up 103.5% with a resale value of $18,366.
With some U.S. cities and states recently adopting all-electric laws, people may be becoming more aware of the impact of natural gas on the environment. With electric HVAC already in place, potential buyers may appreciate the savings on the conversion costs. Tax rebates included in the IRA that come with this conversion could save the homeowner even more, making it a worthwhile investment.
Besides the benefit of a high ROI, switching to an electric HVAC system has additional advantages, such as reducing energy bills and maintenance costs, possibly making this home improvement particularly appealing to potential buyers.
Home improvement ROI increases over the past year
According to last year’s Cost vs. Value report, every home remodeling project featured in the study saw a decreased return on investment compared to 2021 statistics. However, the home remodeling industry seems to have taken a turn. Nine of the projects analyzed this year showed an increased return between 2022 and 2023.
A steel entry door replacement was calculated to have seen the biggest increase in ROI on the list of featured home remodeling projects at 36.9%. Other notable increases include a siding replacement, which rose up to 28% for vinyl and 20% for fiber-cement, and a minor kitchen remodel at 15%. In fact, six out of the nine projects to have seen an increase in ROI were outdoor remodeling projects. It seems that improving the exterior of a home is more likely to result in a higher return on investment than last year.
The true cost vs. value of home remodeling projects
The Cost vs. Value report reveals fluctuating ROIs year-over-year. The true costs recouped from home remodeling projects depend on many factors, such as location, trends, and local costs. The costs recuperated from these projects can then fluctuate according to the state of the real estate market at the time of resale.
Another noteworthy characteristic of return on investments in home remodeling projects is that costs do not correlate with value. Although costlier renovations tend to result in a higher resale value, these investments don’t necessarily yield a higher return. In this year’s report, affordable projects, such as an entry door replacement, have proven to have some of the highest ROIs of 2023.
Overall, it’s important to note that the return values indicated in the report are only to be used as a general guideline when deciding which home improvement projects to take on to add value to a home in 2023.
To read the full report, including more data, charts and methodology, click here.
