Windows a Leading Return in Remodeling, According to 2021 Cost vs. Value Report
Zonda Media released its 34th annual Cost vs. Value Report that found exterior improvement projects continuing a multi-year trend of providing the greatest return on investment for homeowners. Most notably, 11 of the 12 leading investments were exterior home improvements, with the exception of a minor kitchen remodel. The leading returns were primarily siding (including manufactured stone veneer) and windows. Vinyl replacement windows recouped nearly 69 percent of their cost while wood replacement windows yielded a return of almost 68 percent. Steel entry door replacements had a 65 percent return.
"The trend of exterior replacements out-performing larger discretionary remodeling projects has been accelerated, no doubt, by a year in which COVID has made people reluctant to have contractors inside their homes, but wanting to improve outdoor spaces," says Clayton DeKorne, editor-in-chief of Remodeling and JLC magazines. "Exterior facade facelifts improve the curb appeal and makes a great first impression as buyers approach the home. That translates to real dollars at the closing table, which is why we see such tangible returns on those investments."
According to the 2021 report, the combined cost-to-value ratio stands at 60 percent, down from last year, and well below the decade-high of 71.2 percent in 2014. A look at yearly trends shows that project costs have risen consistently since then, with a sharp increase in costs in the last year brought on by supply-chain disruptions largely created by the pandemic and complicated by global trading tariffs. Mirroring the increase in costs, the value-over-cost ratio as a percentage has steadily declined over the same period, with the sharpest decline in 13 years (-3.7 percent) occurring last year (compare to a decrease of -2.4 percent for the year before).
The Cost vs. Value Report is derived from data collected from surveys of real-estate professionals' who were asked to rate the value of the 22 projects. For 2021, Zonda revamped the report's methodology and examines a range of other variables, including housing starts, existing home sales, existing home values, changes in existing home sales and existing home values, among others.
Principle takeaways from the 2021 Report:
- Better Curb Appeal. Better ROI: Nine out of the top ten high return projects are exterior replacement–or high curb appeal–projects. The three exterior projects with the highest recoup on investment are garage door replacement (94 percent), manufactured stone veneer installation (92 percent), and siding replacement with fiber-cement material (69 percent). Wood or composite deck projects and window replacement also provided high returns.
- Rising Materials Costs Still Affecting the Return: While the overall downward change since last year is modest, the latest Cost vs. Value Report still reflects a healthy remodeling market. The effect of the rise in material costs is shown across the board for all projects, with the ROI percentage for all projects down an average of 3 percentage points.
- Unexpected Results: 2020 was a year that experts would expect decks to reign supreme, but the data doesn't necessarily track what is most popular. The report tracks the ratio of value over cost for 22 common remodeling projects and that ratio proved that material costs, especially for decking and pressure-treated framing lumber, went through the roof in 2020, bringing down the return--despite a project's value.