This article helps answer the question: "Is hardwood flooring, and home improvement in general, a good return on your investment?"
Realtor.com writes: If you are a homeowner preparing to fix up your home, you don't want to miss the following statistics and vital information regarding home improvements. According to the National Association of Home Builders, more and more homeowners are embarking upon home improvement projects, with nearly $200 billion a year spent on home renovations.
Certain home improvements yield great payoffs, providing increased comfort and enjoyment to those living in the house and/or boosting marketability and resale value for houses about to go on the market. Other home upgrades, however, can cost you thousands of dollars with little return on your investment -- meaning you won't be able to recoup the money when you sell.
To help you identify factors that affect resale value and home improvements that pay off, here is some need-to-know information for homeowners.
Resale Value is Paramount
Perhaps you're considering repainting the house, changing the wallpaper, upgrading your floors or investing in carpets. Maybe your kids are begging you to build them a playroom or a multi-media center. Your spouse may want a modern kitchen with high-end amenities such as a skylight, sub-zero refrigerator and eight-burner stove, while you may be more concerned about redoing the roof, upgrading the bathroom or sprucing up your home exterior.
How do you prioritize your investments and decide which home improvements pay off? One rule of thumb is to consider how the project will affect the value of your home in the future, as not all home improvements have the same resale value.
Kitchen and bathroom updates can be costly, but the return on your investment ranges between 75 to 100 percent. A high-end siding replacement is another lucrative, yet inexpensive, means of raising your home's purchase price. On the other hand, the addition of a sunroom has poor long-term payoffs, and if your home renovation is too extravagant so that it pushes your home's market value above the value of your neighborhood, you may not get your money back.
Factors Affecting Home Value
You are probably asking: Which home improvements will bring me the biggest returns? Here are two factors that affect resale value:
Location: Did you know that where your home is located can affect the value of your home improvements? Some upgrades are popular only in certain regions of the country; for instance, whether or not a swimming pool adds value to your home depends on where you live. The three most popular locations for homes with pools are the hot climates of California, Florida and Arizona, where in-ground pools increase market value by about 7.7 percent. Conversely, in cold climates, a swimming pool may have no value at all.
State of the market: Home improvements are likely to yield smaller returns in a weak real estate market than in a strong market. At the same time, strategic home improvements in a weak market can help your house stand out and appeal to buyers compared to other properties in your neighborhood.
Today's Top 10 Home Improvements
Here are today's top 10 home improvement areas you can depend upon for a good return on your investment:
Kitchen
Bathroom
Home exterior ("curb appeal")
Home siding
Roofs
Decks
Flooring (especially hardwood floors)
Room addition
Window replacements
Master bedroom
Now that you know which investments are likely to pay off in the future, it's time to get busy and start improving your "home sweet home."