Can You Really Add Value With Home Renovations and Additions?

When pandemic restrictions were initially implemented in March 2020, the American housing market came to a screeching halt that lasted several months. By the time the highly anticipated general elections took place in early November, real estate market participants were ready to take advantage of low mortgage interest rates and strong demand. For homeowners, this emerging trend means that they have an opportunity to profit from property sales if they play the right cards.

Regional housing markets in California are bound to heat up in 2021; whenever this happens, we see a range of prices take form. Motivated sellers will list their homes below market levels while more patient homeowners will stick to median prices. Ambitious sellers will patiently wait for bidding wars to start, but the smartest homeowners will consider renovations and additions.

The Housing Market in 2021

With the right market conditions, smart home sellers can list their properties at levels well above median prices; the key is to choose the right improvement project. Through our experience working with real estate professionals, we can tell you that foundational and structural improvements can go a very long way in justifying a higher sale price. A home inspector can determine if structural issues are affecting your property. Keep in mind that buyers and mortgage lenders will order home inspections; should structural damage be detected, this can open the door to bargaining in favor of the buyer.

Adding a bedroom can certainly give your property an equity boost. Recent changes in socioeconomic conditions and demographics reveal that more people are living under the same roofs. In some cases, elderly parents stay with their adult children; in other situations, adult children move in with their own partners and children. Hispanic buyers who appreciate strong family bonds enjoy living with more relatives, and they are willing to pay more for properties with more bedrooms and interior square footage. In recent years, national home builders have introduced new floor plans that are essentially “homes within homes,” and this is part of a change in buyer demographics.

You may have heard about the equity boosting power of swimming pools not being as strong as it used to be; however, this mostly applies to pools on their own. Once you add other features such as sun decks, summer kitchens, and an area for dining al fresco, you can comfortably assign a higher sales price when listing your property. Home appraisers will always pay attention to these details, particularly when they are thoughtfully designed and built with quality materials.