Everybody loves their newly remodeled kitchen for its upgraded appliances and stunning new look. However, will it make you happy when it’s time to resell your home? Can it generate a high return on investment (ROI)? Remodeling your dated kitchen can yield a decent return if you play your cards right.
How Much ROI Does Kitchen Remodeling Yield?
Kitchen remodeling’s ROI varies by source. This project had a cost recovery of 31.7%-85.7%, according to the 2023 Cost vs. Value Report. The smaller the scope of remodeling, the more you can recoup your expenses.
The lower end of this range is nothing to write home about, but these figures are national. It’s a different story when you look at regional data. For example, a midrange minor kitchen remodeling project yielded an average ROI of 90.2% in the Mountain states. Your location ultimately determines how many cents on the dollar you can recover at resale.
On the other hand, Realtors estimate that you can pocket 75% of what you spend on an $80,000 complete kitchen renovation at resale. Regarding kitchen upgrades, they believe you can only get back 67% of the job cost when your property changes hands.
Why Don’t Kitchen Remodeling Projects Have a 100% ROI?
Hoping to get a 100% ROI from kitchen remodeling is a pipe dream. Rarely does it happen that a buyer forks over more cash than what the seller paid to remodel a home’s kitchen because individuals value things differently. Even married couples veto some of each other’s ideas and meet halfway to make the new design palatable for all.
Truthfully, you probably won’t pay top dollar for your dream kitchen when somebody has already enjoyed it. Construction materials and appliances are subject to wear and tear. Expecting your updated kitchen to carry a price tag equivalent to the project cost — or more — years after using the space is unrealistic.
Inflation is another factor. The value of money goes down over time. If you remodeled your kitchen for $60,000 in January 2020, it should command a resale value of $71,415.24 to break even in November 2023. In short, 119% was the actual magic number to offset your construction bill, not 100%.
A 100% ROI is just an illusion. Even if you use a home equity line of credit to finance your project with less interest, your upgrade will set you back more than your remodeling contract says you’ll spend and drive up the return you need to cross the break-even point.
Why Kitchen Remodeling Is Worth The Expense
Although you can’t expect a kitchen remodeling project to yield a 100% return, it doesn’t mean it’s not worth your while. Among all improvements costing at least $20,000, it promises the highest resale value for four reasons.
1. It’s Among America’s Favorite Rooms
The kitchen is the third-most favorite space of homeowners in the United States. Nearly six out of 10 Americans love having people over, and 41% do because they either like cooking meals for their guests or hosting events. That’s why the kitchen is one of the top social areas of the house.
Wherever you are in the country, it’s one of the first things buyers will scrutinize when you list your house. It doesn’t matter if someone likes to spend more time in the living room or bedroom — a relaxing, comfortable and spacious kitchen is a must.
If your space needs more work on these fronts, revamping it may be in order. Otherwise, buyers may use your undesirable kitchen as an excuse to lowball you.
2. It Can Involve a Plumbing Upgrade
Giving your kitchen a facelift is a terrific time to modernize your home’s pipework and endure construction mess only once. A Houzz survey found that 48% of homeowners want to bring their plumbing systems up to code.
Suppose your property is at least 42 years old. In that case, it predates 51% of owner-occupied homes in the U.S. Overhauling your pipes makes your property more marketable despite its age and spares its next owner the trouble of dealing with such a disruptive job.
3. Features Buyers Want Are Public Knowledge
Increasing your property’s value with a kitchen remodeling project is easy because what homebuyers want is out in the open. The most sought-after kitchen upgrades are:
A) Open Concept
According to HomeLight’s Top Agent Insights for New Year 2023, 57% of real estate professionals say homeowners covet a kitchen that seamlessly connects with the family room. If you don’t have an open plan yet, strongly consider it to visually make your space bigger without building out.
B) Eye-Catching Kitchen Island
About 52% of agents believe an island makes a house easier to sell. This multifunctional furniture is where the action happens, completing the kitchen triangle.
Although the island is the space’s center of attraction, matching its look to your existing cabinetry is a slam dunk. The same colors and similar materials produce cohesion, tying your kitchen elements together. The island and countertops are already visually heavy, so you don’t have to use distinct aesthetics to draw attention.
However, contrasting hues bring more dimension to your kitchen, so take the cue from your floor. Large areas tend to have dark flooring since there’s no need to create an illusion of space. Pairing a dark kitchen floor with light-colored cabinetry can have a balancing effect.
C) Ample Storage
More kitchen storage space is an asset. Keeping this room organized and clean can be a chore, so having ample drawers, cabinets and open shelves can impress most — if not all — homebuyers.
D) Energy-Efficient Appliances
The sustainability movement hasn’t lost steam. About 41% of real estate agents consider eco-friendly appliances — such as stoves, ovens and fridges — magnetic selling points.
If you want to wow green-minded buyers, switch from gas to electric. Electric appliances can reduce carbon footprints and are nontoxic because they emit zero harmful exhaust gasses.
E) Light Colors
About 84% of homebuyers enjoy calming color palettes or white color schemes. This sentiment reinforces the desire for more space. A predominantly light-colored kitchen feels airy, especially in daylight.
4. A Makeover Doesn’t Cost Much
Sometimes, less is more. Midrange kitchen upgrades yield higher returns than upscale ones, so you don’t necessarily have to splurge on them to boost your home’s value.
The Payoff Can Be Rewarding
A kitchen remodeling is a net-loss endeavor — as are most improvements. Still, it promises higher cost recovery than most big-ticket home projects. If you balance your needs and your home’s future prospective buyers’ wants, your kitchen will be your bargaining chip when you sell.