Cost vs Value in 2023
The cost-to-value ratio with home improvements refers to the return on investment (ROI) that homeowners can expect from making specific upgrades or renovations to their property.
It's a measure of how much of the cost of the improvement you can expect to recoup when you sell your home.
Here's how it works:
01. Cost of Improvement
This is the total amount of money you spend on a home improvement project.
For example: If you invest $20,000 in a kitchen remodel.
02. Added Home Value
After the improvement is completed, the home's appraised or market value increases. This is how much your home is now worth with the improvement.
For example: Your $20,000 kitchen remodel increases your home's value by $25,000.
03. Cost-to-Value Ratio
To calculate this ratio, you divide the added home value by the cost of the improvement.
For example: Divide $25,000 (the added value) by $20,000 (cost of improvement), which equals 1.25%.
A cost-to-value ratio above 100% indicates that you're likely to recoup more than you invested when you sell the home. Anything below 100% means you might not fully recover your investment. Keep in mind these ratios can vary depending on location, the specific improvement, and market conditions.
📌 Click here for a full list of home improvements with their cost-to-value ratio. 📌