Planning home improvements? Best ROI by region

Iris Price | Improvement Center Columnist | November 24, 2014

Do you think about remodeling your home as an investment to boost its value or do you see it as an upgrade for your comfort? Probably some of both, but you probably lean more toward one or the other depending on whether you are planning to sell in the near future or not.

Regardless of your short- or long-term goals, it's important to assess whether the scope and proposed costs of your projects are in line with what the market supports. That varies according to where your home is, which is why Remodeling Magazine's Cost vs. Value annual report breaks out their results by regions of the U.S. Upgrading your siding in the Midwest may fetch a higher ROI than it does in Texas, and that can tell you what buyers in general want in those particular areas.

Another way to find out if your home improvement plans make good financial sense is to ask a well-seasoned, local real estate agent what sort of upgrades attract buyers who are looking in your neighborhood. How much have recent buyers been willing to pay for a room addition or kitchen remodel, for example? How extensive do the particular upgrades you are considering need to be to make your home competitive with comparable homes nearby?

Best remodels: highlights of ROI by region

Some of the top home improvement projects nationally for ROI are wood deck additions, fiber-cement siding, attic bedrooms, minor kitchen remodels, and both wood and vinyl window replacements. How do they stack up by region and which improvements might be better -- or worse -- choices where you live?

New England. The best ROI for New England home upgrades are pretty much representative of the national trends: attic bedrooms, wood decks, minor kitchen remodel, vinyl windows, and all types of siding replacements. Building costs are higher for all types of projects but many return 75 percent or more of your investment.

Middle Atlantic. N.Y., N.J. and Pa. homeowners also pay higher remodeling costs with significantly lower ROI than the national averages. Wood decks are the big winners here, recapturing 80 percent of your investment. Other home improvements with biggest payback reflect home owners' concern with safety and weather-related disasters, such as steel entryway doors and back-up generators. Don't look for a high ROI on upscale remodels like bathroom additions or master suites, which barely gave back 50 percent ROI in 2014.

South Atlantic. These are the southern coastal states where construction costs are lower than national averages and ROI is generally higher across the board. Buyers favor wood decks, minor kitchen remodels, attic and basement bedrooms, siding and window replacements, which all may return anywhere from 75 to 89 percent.

East North Central. Ohio, Ind., Ill., Mich., and Wis. home owners are paying higher than national average building costs for all types of remodels, which results in lower ROI. Best bets here are similar to the best projects for ROI nationally.

East South Central. Remodels in Tenn., Miss., Ala., and K.Y. cost less than national averages, especially for upscale remodels, and your ROI can be close to or greater than that of the same projects in other parts of the country.

West North Central. In these Midwestern states remodel costs are close to average, or only a few hundred dollars above the national average costs for the same projects. ROI, however, in many cases is 10 to 20 percent lower than average.

West South Central. In Texas, Ark., Okla., and La. almost all projects except windows and siding had anywhere from a 1% to 10% higher ROI than national averages.

Mountain. For Mont., Wyo., Idaho, Utah, Nev., Co., N.M. and Ariz. costs are generally lower for remodels and all ROI is up since 2013, but vinyl siding replacement and basement remodels are the only mid-range remodels that outperform national average ROIs. Fiber-cement and foam-backed vinyl siding in the upscale category outperform national ROI averages along with roofing replacement, a master suite addition and a composite deck -- beating the national average ROIs by about one percentage point.

Pacific. Construction costs are higher in the Pacific states -- Calif., Ore., Wash., Hi. and Alaska -- but so is the the ROI. Almost all projects produce more than a 70 percent return on investment -- with most returning 85 to more than 100 percent. Even home office remodels, which nationally offer the worst -- only 48.9 percent return -- give back 61 percent ROI in the Pacific states. Biggest winners here with over 100 percent ROI include mid-range attic and basement bedrooms, wood decks, minor kitchen remodels, and vinyl and wood window replacements.

If you don't plan to sell right away, you won't know for sure what buyers might want a decade from now, but you should still find out the type and extent of home improvements that are desirable and/or expected in your locale. It could make the difference between blowing tens of thousands of dollars on an upgrade no one wants and putting your money to better use by making a renovation every buyer expects -- one that not only you can appreciate but could make your home appreciate in value, too.

Photo copyright owned by Quinstreet

About the Author

Iris Price is a single Baby Boomer whose antidote to a lack of retirement funds was to launch a long-delayed career as a writer. While others her age concoct bucket lists and travel the world, she bought a new-construction home and obsessively creates lists of must-have home improvements and personal realization goals. She specializes in writing about home services and self-motivation.