- Julia?
Julia!
Julia, what are you doing?
- Oh, well, I've been binging old fixer upper episodes
and I decided this ugly back splash simply has to go.
Oh, and careful.
Don't trip over that tasteful mid-century lighting fixture.
Oh, and don't touch those walls.
They're freshly painted.
Uber neutral Beige.
- Okay. I'm not gonna lie,
I'm kind of loving the whole Airbnb feel,
but how much is it gonna cost?
- Well don't worry, babe.
It'll all end up back in our pockets at the end of the day.
Investing in equity. Am I right?
Maybe I could even become a house flipper.
- Okay, I think this has gone a little too far.
Not all remodels end up like they do on TV.
And how about we just do a little bit of digging
to see what's really worth the time and effort?
(upbeat music)
- Home improvement is big business.
Globally, the industry is worth about $333 billion
and it's expected to grow to over 500 billion by 2028.
The pandemic actually facilitated this growth.
That kitchen you used to forego using,
in order to eat out became your new sourdough baking zone.
Staring at that ugly wall color all day long,
finally became too much to bear.
And with dining out and travel taking up less of our budgets
home projects happily gobbled up our free dollars.
- Working on your living space
has also become entertainment.
I remember watching the OG home improvement show,
This Old House on PBS, as a kid with my parents.
And these days, there are entire networks devoted
to property improvement like HGTV and Magnolia.
Designers and developers, like Chip and Joanna Gaines
and the Property Brothers, are literal celebrities
and before and after footage
doesn't just show up on the TV anymore.
Home renovations and DIY influencers
are also dominating our social feeds.
- Now, I get it.
Seeing before and after pictures is like visual ASMR,
but if you've ever attempted a home project,
beyond just replacing a broken appliance,
you know it can get eye wateringly expensive.
In fact, for about the last decade,
home improvement costs have been steadily climbing,
above and beyond national baseline inflation.
Covid and the ensuing spike in prices
obviously made it a lot worse,
but the average cost versus value ratio
hasn't been looking pretty since around 2014.
So what sort of improvements
really give you the most bang for your buck?
And if you're a renter,
is there anything you can do to improve your place
without breaking the bank?
- Okay, Julia, wanna play a little home improvement game?
- Oh, heck yeah, I got this.
- What do you think is the most profitable
home improvement you can make?
- Oh, kitchen. Oh, no, no, wait. Bathroom.
Final answer.
- *buzz* sorry.
Topping the list with the most bang for your buck
is garage door replacement.
In 2021, people on average spent about four grand
to replace a garage door, and upon resale,
got about $3,700 back.
That means you're losing 7 cents on every dollar invested,
which is about the best you can expect these days.
- The Journal Of Light Construction
has been tracking national and regional costs
for home improvement projects for 35 years.
They then compare the cost to the value
of the improvement upon the sale of the house.
- Obviously, ROI can depend on your location.
An improvement in one area of the country
might not be as valuable as in another.
- Turns out, according to their study,
kitchen remodeling, my favorite, comes in at number three
in terms of profitability with 71 cents on the dollar,
and bathroom redos are even worse,
usually between 50 and 60 cents.
Of the top 12 projects that give the highest ROI,
11 of them are actually exterior focused projects,
like upgrading siding and adding veneer accents,
which actually makes sense.
People tend to customize indoor spaces
more to their own liking and personal taste,
which might not translate to the next buyer.
But when it comes to outside projects,
you're forced to consider what strangers might be thinking
as they walk or drive by.
- It also might surprise you,
that things actually get worse the more money you put in.
Many studies looking at remodeling numbers
tend to break up projects by budget level.
On one side, you have minor cosmetic improvements
and on the other you have major ones,
like knocking down walls and putting in upscale features.
According to Remodeling Magazine,
the average cost of a minor kitchen facelift
will run you about $14,773.
If you turn that around and sold that home a year later,
you'd get about 87% of that back.
But if you went for the mid-range do over
and spent close to $40,000,
that would go down to about 80% back.
Wanna splurge and spend $80,000?
You might only get close to half back of what you put in.
Also, remember that these numbers aren't assuming
that you're paying interest or taking out debt to do it.
- However, not all is financially lost,
if you wanna make some improvements to your space.
Here are a few tricks
that can help you remain as in the black as possible.
First off, you're already engaging
with the most incredible tool for home improvement, YouTube.
Learning how to cut down on labor costs
is a huge way to save.
Skills like demoing, painting, tiling,
and refinishing surfaces,
can all be done relatively easily by amateurs.
If you're looking to cut energy costs
with energy efficient upgrades,
like replacing a water heater, HVAC unit,
or even solar panels, you can take advantage
of some pretty sweet tax credits
due to the Inflation Reduction Act
that can really help your bottom line.
- But what about renters?
I mean, they make up about 36% of the American population.
Believe it or not, there's a lot of cool stuff
that you can do to your place as a renter,
that doesn't mean you'll be lining your landlord's pockets.
Most leases will allow you to change out things,
like lighting, fixtures, faucets, shower heads,
even changing out drawer handle hardware
can be easy and make a big difference.
Just make sure you keep the originals handy
for when it's time to move.
But once you've bought them yourself, they're yours to keep.
- Changing the walls and flooring
can make a huge difference in a space.
But don't be tempted to rip up that carpet
or linoleum or paint those rented walls just yet.
Instead, invest in things like rugs,
that can be easily moved from one place to another.
There are also lots of really cool stick and peel solutions,
for things like walls and back splashes,
and even bathroom floors,
to cover up those unsightly patterns.
- Okay, Jules, how are you feeling?
- I suppose I can acknowledge
that replacing this back splash
is more like replacing a pair of pants
I don't really like anymore, than investing in my IRA.
- Exactly, most experts agree
home renovations aren't really investments.
Who would wanna invest in something
that has a close to guaranteed negative rate of return?
But that doesn't mean you shouldn't attempt to do them.
Just approach it
like any other lifestyle upgrade you're considering.
Don't take out debt, yank from your emergency fund,
or touch your investments to do it.
- Research, a little sweat equity, and strategic splurges
will keep you sitting financially pretty
through those before and after pictures.
- And that's our 2 cents.
- Before you go, we wanna tell you about
a new slate of documentary series
on our sister channel PBS Voices.
- These series cover everything from hip hop and tech,
to the origins of sacred rituals,
unconventional community engagement,
and the welcoming spaces in the LGBTQ community.
- There's something for everyone.
So if you haven't been over to PBS Voices,
we hope you check them out.
There's a link down below.
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for keeping 2 Cents financially healthy.
Click the link in the description
to become a 2 Cents patron.
(upbeat music)