Making improvements to your home might not sound like it could ever be a negative thing. But depending on the renovations, it doesn’t necessarily mean it will increase its value to a buyer. A big challenge with home improvement projects is how easily you can tell yourself it’s worth the price because it will improve the value of your home. Just because it’s a significant home improvement doesn’t mean that it will pay for itself at sale time, and while this is true for many home improvement projects, many more add no value, and a few might reduce the value compared to your home before you did the work.
Below are 4 of the worst ROI renovations Canadian Homeowners can do.
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Adding a Pool or Hot Tub
No matter how much you and your family might enjoy a swimming pool, before you commit to such an expensive project, it would be wise to consider the costs vs. the long-term value. Research at HouseLogic indicates that in the best climates for pools, it will add a maximum of 7% to your home’s value. That means your home would need a value of over $400,000 for a simple pool to pay itself off with a very motivated buyer. And unfortunately, Alberta, and by extension the rest of Canada aren’t the most friendly climate for such additions.
To make matters worse, not everybody wants a pool. When it comes time to sell, you’ll be excluding a whole class of buyers who don’t want the maintenance expense, want more usable yard, or simply don’t want to swim. In most cases, you should think of a pool as an investment in your lifestyle. Just don't expect it to be an investment in the value of your home.
2.) Installing Wall-to-Wall Carpet
Maybe you don't like the feeling of bare feet on a cold floor in the morning. Well, unfortunately, you're in the minority. Wall-to-wall carpeting just doesn’t have the appeal it used to. An unforgiving magnet for stains, smells, and other signs of wear, even a deep cleaning can’t always return this material to its former glory.
Not only will you not recoup the cost of wall-to-wall carpeting, but—if carpet is the primary flooring throughout—it can actually lower the value of your home. According to data from the National Association of Realtors, 55% of home buyers will pay more for updated, hardwood flooring ($3k+). 90% of buyers said they prefer hardwood flooring as opposed to other types and are willing to pay a premium.
3.) Combining/Converting Rooms
Combining two small bedrooms to create a bigger room might seem like a good idea to a young couple with no children or to empty nesters whose children have left the house. But this is a bad move if you don't plan on staying in the home forever.
"Even small bedrooms add value to homes, as most families want children to have their own rooms but don't mind if they're on the small side," said Brian Davis, real estate investor and director of education of renting resource SparkRental.
"In my experience, each bedroom can add about 15% to the value of a home."
By removing a bedroom, you are effectively removing a room, which often becomes a psychological barrier for buyers: They can't get over the fact that your home is now 'smaller' or offers 'less' than other homes in the area.
This same principle applies for other conversions such as converting a garage into a living space, or converting bedrooms into a walk-in closet/office space.
4.) Overdone Landscaping
Beautiful landscaping can help boost curb appeal and get more prospective buyers in the front door, however, homeowners are prone to certain devaluing landscaping mistakes in the name of "curb appeal," said Theodore Beasley of Landscaping London.
Costly and overdone landscaping could become a concern. Not only is the attractiveness of decorative additions subjective, but buyers could see it as too difficult to maintain. Furthermore, just like pools, the climate plays a rather large role in utilizing and appreciating outdoor improvements, and Alberta is rather low on that list.
The Bottom Line: Not all home improvements add value
A final word to the wise: Consider your selling timeline before you embark on a home improvement that does not add value to your home. If you plan to sell your home in the near future, it’s best to spruce it up with a new coat of neutral paint and other improvements proven to add value and increase marketability.
On the other hand, if you plan to stay awhile, it’s okay to focus on home improvements that bring you joy, even if they don’t add significant value to your home. In the end, do whatever makes you happy. To me, that is really what homeownership is all about. Just realize you might not get every dime back, or you might have to make a modification to it.
Interested in home improvements with a better return? Check out our other article on “4 High Value Renovations that pay off Canadian Homeowners”
Looking to jump into the market as a buyer or seller? Get in touch with us today to help you start your real-estate journey!
