There’s More Than One Way to Measure the ROI of a Remodel
April 26, 2017
Want the best financial return on your next big ticket project to improve your home? Add insulation to your attic. For an investment of $1,343 you'll recoup 108% of its value at resale, according to the 2017 Remodeling Magazine’s 2017 Cost-to-Value Report.
But as anyone who’s ever painted a room “just for a change” can tell you, people don’t always choose home renovations on ROI alone. Take the kitchen, where Simmons Consumer Research tells us 7.8 million kitchen remodeling projects were completed in the U.S. over the last 12 months. Major kitchen remodels only deliver a 65.3% ROI. But, changing trends in consumer lifestyles and new products are converging to make it fun to cook again. And people want to cook in a kitchen they love. So, while a kitchen remodel may not deliver the highest resale ROI, it does deliver a high emotional ROI. Here’s how.
More Family Moments
According to the 2017 Houzz Study on U.S. Kitchen Trends, among homeowners who completed kitchen renovations, 49% said they did it for more family time. And after completing their kitchen renovation, 76% of homeowners said they are now home cooking 5+ days a week.
This certainly fits the lifestyle of hyper-busy GenXs who wants to slow down to share more family nights together with a home-cooked meal in the comfort of their own kitchen.
That same Houzz Study says 1 in 3 homeowners report healthier changes in their lifestyle after a kitchen makeover. They’re exchanging takeout for homemade Brussels Sprouts and cauliflower steaks. Baby Boomers, in particular, are at a life stage where diet and lifestyle transition are meaningful and important.
Millennials have condensed milestones like marriage, buying homes and having children. In the National Association of Realtors (NAR) 2016 Homebuyers and Sellers Generational Trends Report, 35% of all buyers in 2016 were Millennials and 89% are buying existing properties, often ripe for renovation. “I have been working on a full kitchen remodel for the past few months,” said Nate Miller, a millennial homeowner from Pittsburgh. “The old kitchen was a dark hole in the house, so it was the most imperative project to tackle.”
According to NAR, 50% of millennial homeowners are buying homes over 2,000 square feet. These homes may be larger than a traditional starter home, but they also require more updates. And with young families, sizeable mortgages and lengthy renovation checklist, it’s often easier and more cost-effective to eat in.
Creating an Experience
The Millennial generation loves the idea of personalizing experiences. Cooking allows them to do that. As their home begins to serve as a source for entertaining, the kitchen becomes elevated as a central gathering spot. But it’s not just this generation doing this. Often influenced by their millennial children on what they should and shouldn’t eat, a good portion of baby boomer-aged parents are newly independent from their children, with time to rekindle shared experiences to cook as a couple. They’re also using kitchens to create baking and cooking memories with young grandchildren while their children are at work.
Gourmet at Home
Meal delivery services, like Blue Apron, generated $1.5 billion in sales in 2016 with strong projected growth over the next 5 years, according to Packaged Facts. Smartphone apps, low subscription commitments, doorstep delivery and fresh ingredients make for an easy and fun kitchen experience. The step-by-step directions and unusual recipes bring a joy back to cooking, allowing families to expand their culinary boundaries while providing a shared kitchen experience.
The Houzz Study says that over half of kitchen renovations result in a more open access to connecting rooms and 1/3 of homeowners are increasing the size of their kitchen as a result of a renovation.
And with a big ticket project like a kitchen remodel comes the trigger to upgrade other big ticket items in the space. Houzz says that 83% of homeowners will upgrade at least one appliance during a kitchen renovation.
While a home renovation often does add tangible value to your home, it often offers a much higher intangible value. More family time. Healthier eating. A shared experience. These intangible values aren’t measured in dollars and cents, but in smiles and laughter, and that’s a personal, emotional ROI that isn’t going to show up in any industry study.
David Sladack is senior vice president, director of channel marketing at BRUNNER, and leads the agency's Home Enrichment practice.