New Home Market Update: January 2023
The 36th annual Cost vs. Value report is now live! Discover which home remodeling projects deliver the highest return on investment nationwide.
Zonda Media has published the 36th annual Cost vs. Value (CVV) report detailing the most worthwhile home renovations that deliver the best return on investment. Confirming a consistent truth that has resonated for three decades, the report reveals exterior replacement projects continue to provide a higher return on investment (ROI) than interior discretionary remodels. A surprising project revealed in this year’s report is that of heating, ventilation, and air conditioning (HVAC) electrification conversion—notable not only for its popularity but also for its exceptionally high return on investment value of 103.5%. The HVAC conversion project is just slightly higher than the garage door replacement at 102.7%, followed closely by manufactured stone veneer at 102.3%.
“Heat pump technology has evolved,” explains Clayton DeKorne, chief editor of Zonda’s Journal of Light Construction (JLC) Group. “So this conversion makes sense for the first time in all climate zones. Combined with the high gas and oil prices that we have seen over the last year, it’s reasonable to see this project come out on top.”
The most noticeable trend in the 2023 CVV report has been the plunge in the overall ROI numbers. While the projects with the highest returns have edged over 100%, those at the lower end of the ROI range have dropped well below 50%, with the overall Cost-Value ratio down to 34.8%, the lowest in the history of the report. The previous low for the CVV (a ratio of value over cost) was 56.8% in 2011-12, on the heels of the Great Recession.
Todd Tomalak, who leads Zonda’s building product research and advisory practice, reminds us that for the 2023 CVV report, realtors were surveyed in Q4 2022, at what was unquestionably the nadir of the real estate market. Mortgage rates were rising while inflation was surging, and real estate sales were falling. “It was the darkest hour of 2022 and for real estate in a decade,” Tomalak said. “But it provides an important perspective to capture. We learn what products maintain a premium to homebuyers when times are tough, and they can’t afford everything on their wishlist.”
To read the entire report, see the geographic cost vs. value averages, and get more information on the survey results, visit www.costvsvalue.com.
|Rank||Remodeling Project||Job Cost||Value at Sale||Cost Recouped|
|1||HVAC Electrification Conversion||$17,747||$18,366||103.5%|
|2||Garage Door Replacement||$4,302||$4,418||102.7%|
|3||Manufactured Stone Veneer||$10,925||$11,177||102.3%|
|4||Entry Door Replacement | Steel||$2,214||$2,235||100.9%|
|5||Siding Replacement | Vinyl||$16,348||$15,485||94.7%|
|6||Siding Replacement | Fiber-Cement||$19,361||#17,129||88.5%|
|7||Minor Kitchen Remodel | Midrange||$26,790||$22,963||85.7%|
|8||Window Replacement | Vinyl||$20,091||$13,766||68.5%|
|9||Bath Remodel | Midrange||$24,606||$16,413||66.7%|
|10||Window Replacement | Wood||$24,376||$14,912||61.2%|
The Cost vs. Value Report seeks to answer the question, “What value does a particular remodeling project add to the sale price of a home?” This year’s results were determined in part through data collected from surveys of real estate professionals along with data delivered via Zonda’s collaboration with Verisk’s remodeling estimating solution, XactRemodel®. The solution is powered by precise, local pricing data that is researched and vetted by Verisk’s pricing data team. The collaboration allows remodelers, homeowners, and real estate investors to quickly look up the average cost of 23 remodeling projects versus how much value those projects retain at resale. The data is available for 149 local U.S. markets.