How much equity will I gain by renovating?

Cost Versus Value Home Renovation Metrix 

We have provided statistics from a national database to educate the average homeowner about remodelling projects cost and financial gains at resale. If you have found us, chances are pretty good your home is in need of a major renovation. Before you invest tens-of-thousands dollars into your home’s equity, here’s what you need to know.

One of the first things we tell clients is the money you invest in a remodel will never be fully recouped. On average, dollar for dollar return on investment is 75 per cent with an expected loss of 25 per cent. Although it seems like throwing money away once you factor in home transfer tax, higher mortgage payments, and all associated moving costs, the 25 per cent loss equals out to be the same in both circumstances. So before you book the movers, crunch the numbers. You may be surprised.

The Remodelers Magazine cost versus value report is an American publication now in its 29th year. It's the most reliable resource for home renovations in North America. Currently, no such report exists for the Canadian market. Farnsworth Group, a leading provider of market research for the housing and residential construction in the states, collected the data. It canvased 100 real estate markets in the USA for 30 home projects, asking a panel of industry professionals to evaluate the rate of return on each of these projects in their local area.

From its report, we choose three different regions that meet our criteria for comparison. The Middle Atlantic, East North Central, and Pacific. They were chosen based on similarities to Toronto in terms of population, public transportation, geography, and real estate market performance. Although, it should be noted that the Pacific region performed better than the other two regions. It's also the lowest cost for remodelling projects, where upscale projects are more in-line to materials and labour costs in Toronto.

Middle Atlantic Region (Greater New York & Area):

• Basement remodel 57.9 per cent 
• Bathroom addition 52.7 per cent
• Bathroom remodel 58.1 per cent
• Family room addition 59.6 per cent 
• Major kitchen remodel 62.1 per cent
• Master suite addition 60.1 per cent
• Two-story addition 64.4 per cent

Basement remodel cost $71,766, increasing the equity in the home by $41,560 at resale. Compared to the national average of 70.4 per cent at a cost of $68,490 with $48,194 of added home equity.

Bathroom addition cost $44,721, increasing the equity in the home by $23,584 at resale. Compared to the national average of 56.2 per cent at a cost of $42,233 with $23,727 of home equity added.

Bathroom remodel cost $18,841, increasing the equity in the home by $10,592 at resale. Compared to the national average of 65.7 per cent at a cost of $17,908 with $11,769 home equity added.

Family room addition costs $90,829  increasing the equity in the home by $54,120 at resale. Compared to the national average of 67.9 per cent  at a cost of $86,615 with $58,807 of home equity added.

Major kitchen costs $61,399, increasing the equity in the home by $38,122. Compared to the national average of 64.9 percent at a cost of $59,999 with $38,938 of home equity added.

Master suite costs $120,995,  increasing the equity in the home by $72,774. Compared to the national average of 64.1 per cent at a cost of $115, 810 with $74,224 of home equity added.

Two-story costs $176,827, increasing the equity in the home by $113,890. Compared to the national average of 69.3 per cent at a cost of $171,056 with $118,555 of home equity added.

East North Central (Chicago, Illinois):

• Basement remodel 61 per cent
• Bathroom addition 52.4 per cent
• Bathroom remodel 59.8 per cent
• Family room addition 63.8 per cent
• Major kitchen remodel 63.6 per cent
• Master suite addition 58.2 per cent
• Two-story addition 65.2 per cent

Basement remodel costs $69,921, increasing the equity in the home by $22,743 at resale. Compared to the national average of 70.4 per cent at a cost of $68,490 with $48,194 of added home equity.

Bathroom addition costs $69,921, increasing the equity in the home by $42,643 at resale. Compared to the national average of 56.2 per cent at a cost of $42,233 with $23,727 of home equity added.

Bathroom remodel costs $18,383, increasing the equity in the home by $10,991 at resale. Compared to the national average of 65.7 per cent at a cost of $17,908 with $11,769 home equity added.

Family room addition costs $88,379, increasing the equity in the home by $56,367 at resale. Compared to the national average of 67.9 per cent at a cost of $86,615 with $58,807 of home equity added.

Major kitchen remodel costs $60,689, increasing the equity in the home by $38,626 at resale. Compared to the national average of 64.9 percent at a cost of $59,999 with $38,938 of home equity added.

Master suite addition cost $117,828, increasing the equity in the home by $68,587 at resale. Compared to the national average of 64.1 per cent at a cost of $115, 810 with $74,224 of home equity added.

Two-story addition costs $172,109, increasing the equity in the home by $112,171 at resale. Compared to the national average of 69.3 per cent at a cost of $171,056 with $118,555 of home equity added.

Pacific (San Francisco, California):

• Basement remodel 89.4 per cent
• Family room addition 83.8 per cent
• Bathroom addition 69.5 per cent
• Bathroom remodel 76.2 per cent
• Major kitchen remodel 74.8 per cent
• Master suite addition 75.3 per cent
• Two-story addition 86.1 per cent

Basement remodel costs $79,484, increasing the equity in the home by $71,082 at resale.

Family room addition cost $99,205, increasing the equity in the home by $83,103 at resale.

Bathroom addition costs $48,085, increasing the equity in the home by $33,424 at resale. Compared to an upscale addition 67.3 per cent at a cost of $87,142 with $58,686 of home equity added.

Bathroom remodel costs $20,401, increasing the equity in the home by $15,539 at resale. Compared to an upscale addition 66.5 per cent at a cost of $61,556 with $40,936 of home equity added.

Major kitchen remodel costs 66,299, increasing the equity in the home by $49,611 at resale. Compared to an upscale remodel 70.6 per cent at a cost of $127,491 with $90,055 of home equity added.

Master suite addition costs  $130,464, increasing the equity in the home by $98,164 at resale. Compared to an upscale addition 66.5 per cent at a cost of $ with $ of home equity added.

Two story addition costs of $188,464 increasing the equity in the home by $162,202 at resale.

For more results check out Remodelers Magazine 2016 report here.

And The Survey Says…

The average return rate for thirty projects was 64.2 per cent. Many of the best percentage gains were for higher-dollar upscale projects. Topping the list is the two-story addition, an 8.1 per cent higher recoupment than in the 2015 report; the master suite, up 6.5 per cent; and the major kitchen remodel, 4.2 per cent higher. In fact, four of the top five gains were for upscale projects in high-demand markets where projects can recoup upwards of 80 per cent of cost.