Neighborhood determines home upgrades

The new year is a perfect time to take stock of home-improvement goals.

But not all space makeovers are created equal.


Resale-minded homeowners can boost their property value by investing in updates and renovations that recoup the most bang for their remodeling buck. But a tight real estate market forces homeowners to pick and choose the updates that are worth pursuing.

Considering a splurge like a pool or a home theater? That may improve your quality of life but the investment could over-improve your property if it means your house will out-price most others in the neighborhood. Or take a more practical approach by completing only the projects that will increase your bottom line.


The best guide for choosing such money-smart renovations is the neighborhood itself, says Sid Davis, author of Home Makeovers That Sell (Amacom Books, $15). Stay consistent with the renovations and updates completed by neighbors to avoid investing in an improvement that may negatively impact your home's value.

For instance, don't install granite counters if laminate is more popular and marketable in your area. But do spring for an extra bathroom if most homes in the neighborhood have three and yours only has two.

If you want a pool, go ahead and build one. But understand this: If no other home in the area has one, you won't likely reap any benefit other than better health from logging laps.

What's more, if the average price of a home is $220,000, it makes little sense to add a $100,000 addition, experts say. The house may ultimately be perceived as overpriced, and may not sell quickly.

"The neighborhood determines what your home is worth," Davis says. "Work within those parameters and don't try to make your house something" it isn't.

Be a brazen, snoopy neighbor for renovation input and ideas. Take notes during open houses. Visit new subdivisions to glean cutting-edge decorating styles.

The smart money is on kitchen and bathroom updates. Those rooms tend to have the greatest investment return: 102 percent for a minor bathroom remodel, according to the National Association of Realtors. A minor kitchen remodel nets 98.5 percent in returns.

"It's just drywall, paint and carpet in the other rooms," explains Darryl Starman, owner of the Kitchen Tune Up business in Aurora, Colo. "Sixty percent of [building] costs come from ... the cabinetry, the appliances, the electrical and the plumbing."