Phoenix ranks No. 4 for lowest home renovation ROI
Home improvement and remodeling projects have been increasingly popular as more people hang out at home. Spending on home improvement averaged $8,305 over 2020, which is a $745 increase from 2019. The most popular projects were bathroom and kitchen remodels. On average, homeowners spent $2,995 on each home renovation project.
And though they may have been fun, many are probably wondering if these projects were worth it financially and how much renovations will increase their property value.
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In this report, we analyzed thousands of real estate listings in 10 of the hottest real estate markets in the country. The goal was to find out where renovated or updated homes see the largest increase in price per square foot. Before we begin, keep in mind that your own experience may vary based on various factors, such as the renovations you invest in and the age of your home.
• Dallas homeowners see the most ROI, at a 23% increase in value per square foot, followed by Miami and Houston.
• Riverside, CA, has the lowest renovation ROI, with just a 2% increase in value per square foot, followed by San Diego and Las Vegas.
• On average, renovation increased the value per square foot by just under 13%, or $34 per square foot.
Cities With the Lowest Renovation ROI
Of course, not every market sees such gains from renovations. There are some cities where renovations offer little to no increase to home value at all.
If you want to renovate your home and live in one of these markets, though, fear not. You can use this data to make sure your renovation costs align with the rest of the market and ensure that your renovation spending stays in check.
1. Riverside, CA
Located south of San Bernardino and east of Los Angeles, house values are somewhat lower than other west coast markets. The median sale price is $575,000, and homes spend an average of 24 days on the market.
Before renovations, Riverside homes are valued at $348 per square foot. After renovations, that price increases a mere $9 to $356.82 per square foot. That’s a growth of 2%.
With this data in mind, it helps to apply that to the average Riverside home. Despite just a 2% value gain from renovations, that still translates into over $19,000 in increased house value. An average-sized, non-renovated home would sell for roughly $787,370. After renovations, that value becomes $806,770.
2. San Diego
Another California city is the next on the list. San Diego boasts expensive homes and a limited housing inventory.
Compared to Riverside, the average home is worth over $200,000 more. The median sale price is $805,000. Plus, homes only spend 14 days on the market.
Non-renovated homes are an average of $645 per square foot. Meanwhile, renovated homes are priced at an average of $666 per square foot. That 3% increase equates to an extra $21 per square foot.
3. Las Vegas
The next listing sees the return of double-digit value increases after renovations. Home prices are less than its California neighbors. The median sale price of an average Vegas home is $375,000, and homes spend a mere 25 days on the market.
Looking at that number a bit closer, non-renovated homes are priced at an average of $221 per square foot. After renovations, homeowners can expect to see an average of $242 per square foot. That $21 increase equates to nearly an extra 10% in home value.
For an average-sized, non-renovated home in Las Vegas, that would command an extra $48,000 when the home sells. Specifically, a non-renovated home would sell for roughly $499,320. With renovations, that number climbs to about $547,615.
The Phoenix market is in a similar position as Las Vegas. With a population of over 1.6 million, this state capital also features a heated housing market.
Like Las Vegas, the Phoenix market reflects renovation values more favorably than California markets. With a median sale price of $402,000, renovations improve the home’s value by 10%. In fact, non-renovated homes are priced at an average of $258 per square foot. Compare that to $284 for renovated homes, and that $26 improvement begins to pack on the value.
For instance, before renovations, an average-sized home would sell for around $582,980. With help from a local kitchen remodeler, the house could appreciate over $58,000, up to $641,555.
We head back to the West Coast for our final market. Seattle and other Pacific Northwest markets are notorious for their high values and costs of living.
Seattle showcases a median sale price of $790,000. With an average of just seven days on the market, it’s clear how hot the Seattle housing market is. That high worth translates into a high square footage value as well, even before renovations. An average house is worth $487 per square foot before renovations.
Some home restoration, though, can boost that value by $551 per square foot. That’s $64 per square foot, or a solid 13% jump in price.
Specifically, an average-sized house in Seattle will sell for $1,101,650 before renovations. This is an impressive number, indeed. However, renovations could add another $144,000 to that value, as renovated homes sell for an average of roughly $1,245,995.
5 Cities With the Highest Renovation ROI
The following five cities offer the highest ROI for home renovations. The good news is that despite the high cost of living in many of these cities, the value of a home will show impressive growth, especially with well-implemented and -researched renovation projects. You can use the following for inspiration for your next project:
1. Dallas/Fort Worth
The Dallas/Fort Worth housing market is one of the largest in the nation. The median sale price is $385,000, and homes spend about a month on the market.
On average, non-renovated homes come in at $203 per square foot. By contrast, renovated homes are an average of $249 per square foot. That’s nearly a 23% increase in value, or $46 per square foot.
To break that down a bit further, we also considered the average square footage of homes completed in 2020. In the Dallas/Fort Worth market, that average comes out to be about 2,260 square feet. With those numbers, we find that an average-sized, non-renovated home would sell for around $459,210. Meanwhile, a renovated home would sell for around $563,600, meaning that a renovation could help boost your home’s value by over $100,000.
While not as booming as Dallas/Fort Worth, Miami is another real estate hotspot. Homes have a median sale price of $415,000, and they’re staying on the market for 52 days, which is nearly double that of the Dallas-Fort Worth market.
On average, renovated homes are valued at $362 per square foot. Meanwhile, non-renovated homes sit at $300 per square foot. That $62 difference denotes an almost 21% increase in value from home renovations.
An average-sized Miami house would be valued at around $678,280 before any renovations. After improvement projects, that value jumps to around $819,255. In other words, home renovations can add an extra $140,000 to your home’s value.
The next entry brings us back to Texas in the state’s most populous city: Houston. Compared to other cities on the list, Houston features relatively low average home values. The median sale price is $284,900, and homes only spend 19 days on the market.
For an average-sized house in Houston, homeowners are looking at a value of $142 per square foot before any renovations. After renovations, that number rises to $167 for an increase of 18%. That extra $26 per square foot may seem small, but on average, that leads to an increase of over $57,000.
Specifically, renovated Houston homes of average size are worth $378,695, compared to around $320,885 for non-renovated homes.
4. Tampa, FL
The fourth listing is another of Florida’s largest cities. The median sale price of Tampa’s homes is $334,900. Unlike Miami, Tampa homes are gone in the blink of an eye, spending 11 days on the market.
In Tampa, renovations drive nearly a 15% increase in value. Average-sized, non-renovated homes list for around $495,705. Meanwhile, renovated homes sell for around $568,800. That’s an increase of over $73,000. Per square foot, that equates to an extra $32, as square footage pricing rises from $219 to $252.
5. Nashville, TN
The fifth-highest ROI can be found in Nashville, another booming market with 1,314 listings this year alone. Sales are quick, too, with homes spending just 29 days on the market before selling for a median sale price of $381,000.
In Nashville, renovations lead to a 14% increase in home value, from $235 per square foot, up to $269. That’s an extra $34 per square foot.
An average-sized home would sell for roughly $531,675 before renovations. After renovations and improvements, that same home would sell for around $608,800, netting over $77,000 in extra value.
Considerations When Remodeling Your Home
No matter the market, renovations add some value to the home. Even if you’re not looking to sell, renovations can help you create the home of your dreams. If you need help planning for your next project, find a home renovation pro near you.
Methodology: Using Redfin.com, we analyzed real estate listings in 10 of the hottest housing markets in 2021, according to Zillow.
Homes analyzed were single-family homes with a minimum of two bedrooms that have sold within the last three months. Homes built within the last 10 years were excluded.
When it comes to the number of listings, we analyzed:
• Dallas/Fort Worth: 1,053
• Miami: 787
• Houston: 1,346
• Tampa: 898
• Nashville: 1,314
• Riverside: 400
• San Diego: 968
• Las Vegas: 1,258
• Phoenix: 1,240
• Seattle: 911
To analyze the average cost per square foot in renovated homes, we looked exclusively at listings that featured keywords like “renovated,” “updated,” and “remodeled.” To analyze the average cost per square foot of non-renovated homes, we looked exclusively at listings that featured keywords such as “maintained” and “potential.” We reviewed listings that contained both types of words and correctly categorized them.