Does Home Renovation Increase Value? The Real ROI of Upgrades in 2026

With mortgage rates expected to drop below 6% by 2026, more buyers will enter the market. For Dayton area homeowners, this means smart upgrades could help you get top dollar when you sell. But here’s the truth: not every renovation pays off.

So, does home renovation increase value? The short answer is yes, but only if you pick the right projects. The type of work, the cost, your local market, and the quality of the work all play a role in how much value you add.

In this guide, we break down which home renovations offer the best return on investment (ROI), which ones may hurt your resale price, and how to calculate your home’s value after renovations.

Understanding ROI: How Renovations Actually Add Value

Before you grab your wallet, you need to know how ROI works in home remodeling. ROI measures how much of your renovation cost you can expect to recover when you sell.

Cost vs Value: Why ROI Usually Isn’t 100%

Most renovations do not pay back 100% of what you spend. On average, homeowners get back about 74 cents for every dollar spent on large remodeling projects. This means a $50,000 kitchen remodel might only add $37,000 to your home’s sale price.

However, some projects return more than you invest. According to the JLC 2025 Cost vs. Value Report, eight of the ten highest ROI projects are exterior upgrades. These projects often return 100% or more because they boost curb appeal without high labor costs.

The Role of Market Context, Home Age, and Neighborhood Ceiling

Your local market matters a lot. A pool might add value in Florida but hurt your resale in Ohio. Older homes often need updates just to meet buyer expectations. And if your home is already the most expensive on the block, big upgrades may not pay off.

Real estate pros call this the “neighborhood ceiling.” If homes in your area top out at $350,000, spending $80,000 on renovations to push yours to $400,000 likely won’t work.

When Renovations Improve Livability but Not Value

Some projects make your home better to live in without adding much resale value. A home theater, custom wine cellar, or themed room might bring you joy. But most buyers won’t pay extra for these features.

The key question: Will this upgrade appeal to most buyers, or just me?

High ROI Renovations That Increase Home Value

Now let’s look at the projects that actually pay off. These numbers come from the JLC 2025 Cost vs. Value Report and industry data.

Garage Door Replacement (Up to 349% ROI)

A new garage door is the top ROI project for the second year in a row. The average cost runs about $4,317, but it can add over $15,000 in resale value. Some markets see returns up to 349%.

Why does it work? Your garage door can cover nearly one third of your home’s front view. A new door instantly signals that the home is well maintained.

Entry Door Upgrade (216% ROI)

A steel entry door costs around $2,435 but adds about $5,270 in value. That’s a 216% return. Beyond looks, new doors offer better security and energy savings.

Manufactured Stone Veneer (208% ROI)

Adding stone veneer to your home’s exterior costs about $11,702 and returns roughly $24,328. This 208% ROI makes it one of the best exterior upgrades you can do.

Minor Kitchen Remodel (113% ROI)

You don’t need a full gut job. A minor kitchen remodel with updated cabinets, counters, and appliances costs around $28,458 and recovers about 113% of that investment.

Focus on cabinet refacing, new hardware, updated counters, and modern appliances. Skip moving walls or changing the layout.

Fiber Cement Siding (114% ROI)

Replacing old siding with fiber cement costs about $21,485 and adds around $24,420 in value. That’s a 114% return. New siding changes how buyers see your entire home.

Deck Addition (89% to 95% ROI)

Outdoor living space is a big selling point. A wood deck costs about $18,200 and returns up to 95% of that cost. Composite decks run around $25,100 with an 89% return.

Bathroom Upgrades (74% to 93% ROI)

About 18% of real estate agents say modern bathrooms are among the most wanted features. A midrange bathroom remodel costs roughly $26,138 and returns 74% to 93% depending on your market.

Source: https://www.jlconline.com/cost-vs-value/2025/

Focus on rain shower heads, double sink vanities, extra storage, and spa like touches.

Functional Floor Plan Updates

Open layouts and flexible spaces sell. Consider removing a wall between the kitchen and living room, or turning an unused formal dining room into a home office.

Livable square footage often raises your appraised value more than luxury finishes.

Basement or Attic Conversion (70% ROI)

Finishing your basement or attic adds living space without the cost of building out. These projects typically return about 70% of your investment while making your home much more appealing.

Curb Appeal and Landscaping

First impressions count. Simple updates like fresh mulch, trimmed shrubs, pathway lights, and a power washed driveway cost little but make buyers excited before they walk in.

Energy Efficiency Improvements

Buyers want to save on utility bills. Upgrades like better insulation, Energy Star windows, and smart thermostats add value and help your home sell faster.

In 2025, about 19% of remodeling projects were driven by energy efficiency goals. This trend will grow in 2026.

Small But Impactful Repairs (High ROI with Low Cost)

The project with the highest ROI? Refinishing wood floors. You can recoup 147% of the cost for this simple project.

Other low cost, high impact repairs include:

• Fresh interior paint in neutral colors. This was the most common pre listing project in 2024.
• Re caulking and re grouting in kitchens and bathrooms.
• Updating light fixtures.
• Fixing worn flooring.
• Replacing cabinet hardware.

Outdoor Upgrades and Their Effect on Home Value

Deck and Patio Additions

Decks and patios expand your living space at a lower cost per square foot than indoor additions. They appeal to buyers who want space to relax or entertain outdoors.

Hot Tubs: When They Help, When They Don’t

An in ground hot tub paired with a pool can boost appeal in the right neighborhood. But the $8,000 to $25,000 cost may not pay back fully.

A portable hot tub is a safer bet. Appraisers treat these as personal property, so you can sell it separately.

Pools: Location Based ROI

Swimming pools can add up to 7% to home value in warm climates like Florida or California. But in Ohio and other cooler states, pools often hurt more than help.

Many buyers see pools as safety hazards and maintenance headaches. Talk to a local real estate agent before adding one.

Renovations That May NOT Increase Value

Not every upgrade is worth the money. Here are the projects that often fail to pay off.

Luxury Custom Upgrades

High end touches like marble floors, professional grade appliances, and custom built ins rarely return their cost. Buyers in most price ranges won’t pay extra for luxury you chose for yourself.

Stick with quality mid range finishes that appeal to a wide audience.

Over Personalized Improvements

A home recording studio, themed room, or unusual color scheme may turn buyers off. They see extra work to undo your choices.

When in doubt, go neutral. Let buyers imagine their own style in the space.

Garage Conversions

Converting a garage to living space adds square footage but removes something most buyers want: a garage. This usually decreases your home’s value.

High Cost Landscaping

Elaborate water features, exotic plants, and high maintenance gardens look great but scare off buyers who don’t want the upkeep.

Simple, clean landscaping works best for resale.

Swimming Pools in Cooler Climates

As mentioned, pools in areas like Ohio often hurt value. The short swimming season doesn’t justify the cost and maintenance in most buyers’ minds.

What Is After Renovation Value (ARV)?

If you’re financing renovations or buying a fixer upper, you need to understand ARV.

After Renovation Value is the estimated worth of your home after all planned work is complete. Lenders use this number to decide how much you can borrow with renovation loans.

How ARV Is Calculated (70% Rule Framework)

A simple way to estimate ARV: 

• Current Home Value + (70% x Cost of Renovations) = ARV
• The 70% accounts for the fact that most renovations don’t return 100% of their cost.

Example of ARV Calculation

Say your home is worth $450,000 and you plan a $50,000 kitchen remodel.

$450,000 + (70% x $50,000) = $485,000 estimated ARV

This gives you a rough idea of your home’s value after the project.

As Completed Appraisal Explained

When you apply for a renovation loan, a professional appraiser will do an “as completed” appraisal. This is different from a standard appraisal.

The appraiser reviews your renovation plans, contractor bids, material costs, and similar homes that sold recently. They then estimate what your home will be worth once the work is done.

Factors Appraisers Use

When calculating your official ARV, appraisers consider:

• Property location and neighborhood.
• Square footage before and after renovations.
• Recently sold homes similar to yours (comps).
• Your detailed renovation plans.
• Contractor cost estimates.
• Current market conditions.

Why ARV Matters for Renovation Loans

Renovation loans like FHA 203k, Fannie Mae HomeStyle, and others base your borrowing power on ARV, not your current home value. This lets you finance bigger projects than traditional loans would allow.

With some renovation products, you can borrow up to 90% of your after renovation value.

How to Decide Whether a Renovation Will Increase YOUR Home Value

Not every high ROI project works for every home. Here’s how to make smart choices.

Analyze Local Market Demand

What do buyers in your area want? In Dayton and surrounding cities, priorities may differ from coastal markets. Talk to a local real estate agent or contractor who knows your market.

Compare Your Home to Neighborhood Standards

If every home on your street has updated kitchens and yours doesn’t, that’s a problem. But if you’re already at or above the neighborhood standard, more upgrades may not help.

Check Buyer Preferences in Your Region

What features are buyers looking for right now? In 2025, about 36% of buyers rated smart home features as highly important. Home offices and outdoor living spaces also top the list.

Avoid Over Improvement

The 30% rule suggests keeping total renovation costs under 30% of your home’s current value. For a $300,000 home, that means spending no more than $90,000 on upgrades.

Going beyond this risks pricing yourself out of your neighborhood.

Focus on Universal Appeal, Not Personal Taste

Choose updates that work for most buyers. Neutral colors, functional layouts, and quality mid range finishes sell better than unique or trendy choices.

Consider Timing: Living vs Selling Soon

If you plan to sell within a year, focus on cosmetic fixes like paint, fixtures, and landscaping. If you’re staying longer, strategic improvements like kitchens and bathrooms make more sense.

Low Budget Renovations That Still Boost Value

You don’t need a big budget to increase your home’s appeal.

Fresh Paint

A new coat of interior paint is the most popular pre listing project. Research shows painting certain rooms with certain colors can increase your sale price. For example, an olive green kitchen might add $1,600 or more to your sale price compared to other colors.

Updated Lighting

Swap out dated fixtures for modern, energy efficient options. This small change can transform a room’s feel.

Modern Cabinet Hardware

New knobs and pulls cost a few dollars each but give kitchens and bathrooms an instant update.

Flooring Refresh

Deep clean existing floors or buff out scratches on hardwood. If carpets are stained or worn, consider replacing them. Homes with updated flooring sell faster.

Basic Repairs

Fix leaky faucets, cracked tiles, and peeling paint. These small issues signal neglect to buyers and can cost you during negotiations.

Financing Options for Value Adding Renovations

How will you pay for your upgrades? Here are the main options.

Cash

If you can afford it, cash is the best choice. No interest payments, no debt. But your money is tied up until you sell.

Second Mortgage

A second mortgage gives you a lump sum at a fixed interest rate. Good for large, one time projects.

HELOC

A Home Equity Line of Credit works like a credit card secured by your home. You borrow what you need during a draw period. Interest rates are variable, so costs can change.

Most lenders require that your remaining mortgage plus the HELOC total less than 90% of your home’s current value.

Renovation Loans Based on ARV

Renovation loans like FHA 203k and Fannie Mae HomeStyle let you borrow based on your after renovation value. This gives you more borrowing power for big projects.

What to Do If You Can’t Afford Renovations

If your budget won’t allow upgrades before listing, you have options:

Sell as is. Price your home to reflect its condition and be clear with buyers that you won’t make repairs.

Offer a repair credit. Give buyers money at closing to make fixes themselves. Note that buyers often ask for more than the actual repair cost.

Focus on essentials. Prioritize the cheapest fixes that remove buyer objections, like paint, cleaning, and minor repairs.

Final Takeaway: Do Renovations Really Increase Home Value?

Yes, home renovations can increase your home’s value. But the payoff depends on what you do and how you do it.

Here’s what to remember:

Small, low cost improvements often deliver the best ROI. Paint, hardware, and basic repairs go a long way.

Exterior projects consistently outperform interior remodels. Curb appeal drives first impressions and sale prices.
Over personalized or luxury upgrades rarely pay back. Choose features that appeal to most buyers.
Your local market matters. What works in one city may not work in another.

ARV helps you understand the real impact. Use it to plan renovations and secure financing.

Before you start any project, talk to professionals who know your local market. They can help you avoid costly mistakes and focus your budget where it counts.

Ready to Plan Your Renovation?

If you’re in the Dayton, Ohio area and thinking about upgrades that add real value, Builders Group Construction (BGC) can help. With 75+ years of combined team experience, our team knows which projects deliver the best ROI in local markets like Dayton, Beavercreek, Centerville, Kettering, and beyond.

From kitchen and bathroom remodeling to deck additions and whole home renovations, we guide you through every step with transparent pricing and expert craftsmanship.

Call BGC today at 937-800-4409 or visit bgcnow.us to schedule your free consultation. Let’s talk about your renovation goals and find the smartest way to increase your home’s value.

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