Kitchen vs. Bathroom Renovation: Maximizing Return on Investment

In the United States, kitchen and bathroom renovations are undoubtedly top priorities for homeowners. This is because these two areas are the most frequently used and busiest spaces in a home. However, the cost can often be a major hindrance preventing homeowners from fully investing in these renovations.

The National Kitchen and Bath Association (NKBA) recommends keeping remodeling budgets between 5% to 10% of your home value. So, for a $400,000 home, you may spend as much as $40,000 on your kitchen or bathroom renovations. However, costs don't always reflect the added value of a remodeling project. So, which renovation adds more resale value?

When deciding which project to pursue, remember that adding value to your home doesn’t just mean boosting its resale value and calculating your return on investment (ROI). Remodeling the kitchen and bath should offer other valuable benefits for homeowners, improving comfort and enjoyment.

Renovating the Kitchen:

The complexity of a kitchen remodel compared to a bathroom renovation, especially when it comes to wiring and additional appliances, contributes to the higher average costs of remodeling. On average, a minor kitchen remodel costs nearly $23,000. According to the 2019 Cost vs Value report, homeowners recouped as much as 80.5% of their investment with a minor kitchen upgrade, using the national average.

While minor kitchen remodels won’t exceed the recommended NKBA budget, a major kitchen remodel will. The same national report revealed that a major kitchen remodel can cost anywhere between $66,196 to $131,510. However, high-end and luxury additions to the kitchen may not recoup as much cost. Major kitchen remodels tend to recoup at least 59.7% of their costs.

Generally, people love spending time in the kitchen. Therefore, an upgraded kitchen will be very appealing. This could signal more efficiency with storage and meal prep, thus more pleasurable time cooking, dining, and entertaining.

Renovating the Bathroom:

A mid-range bathroom remodel costs around $21,000. The highest average reported recouped costs for bathroom remodels are for mid-range bathroom remodels at 67.2%. While the average upscale remodeling costs for bathrooms are not as high as that of upscale kitchen renovations, the average is still high at $64,743. For a bath remodel of this scale, the recouped costs of 60.2% are comparable to upscale kitchens. In this sense, a luxury bath remodel will boost your home value nearly as much as a high-end kitchen without spending as much.

Another option for those wishing to remodel their baths would be bathroom addition. The projected recouping of costs is roughly the same as a luxury bath remodel. Now, adding a full bathroom may give you a 5.7% boost in median home value. That’s nearly a 100% return if you followed the NBKA recommended budget range. In cities such as Atlanta, Sacramento, and Minneapolis, an additional full bath can boost resale value by around $25,000. What is the appeal of an upgraded bathroom? An upgraded bathroom could mean more space to bathe kids, have a place in your home for a spa-like retreat, or make it a safer bath for older adults in your family.

Takeaway:

When it comes to home repairs before selling, a functional kitchen and bath are known to appeal to buyers more significantly, boosting the selling rate. However, when you are presented with the question ‘what adds more value between a kitchen or bathroom remodel?’, kitchen renovation would stand out as the first place you should remodel considering cost factors alone. However, an upgraded bathroom is also something you want to line up as your next project, once your budget permits.

When remodeling these two areas of your home, consider the functionality. First, check the obvious such as structural, plumbing, and electrical issues. These problems may show up during home inspection, where the buyer may attend. Moreover, think about adding storage, extra square footage, and eco-friendly appliances and fixtures. Studying remodeling trends for baths and kitchens may also help home sellers decide on what features to upgrade.

Finally, it is wise to study the average real estate market value prices in your area before making any home improvements. If you want to add value to your real estate, avoid home improvements that are well above average in your neighborhood. Bigger may not always be better for home remodeling projects.