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What Do Americans Believe Adds The Most Home Value?

6 minute read March 25, 2022

  • 55% of people agree that a good kitchen could convince them to buy a home they otherwise wouldn’t.
  • A renovated bathroom could add nearly $12,000 to a home buyer’s perceived value of a home.
  • Perceived home values in a desirable area were 30% higher than others.
  • Proximity to outdoor recreation adds over $61,000 in perceived value to a home. 

The COVID-19 pandemic has had many unforeseen repercussions, one of which is a boom in the housing market. At the start of the pandemic, the median sale price for a home hovered just over $260,000 – by the end of 2021, prices had risen to more than $330,000. While home prices across the country are on the rise, there are certain home features that can increase a home’s value more than others. Homeowners considering selling in the future may be interested to know which renovations would yield the highest return on their home improvement investments. Meanwhile, home buyers may want to add these valuable features to their future home wish list.

A new study from Rocket Homes aims to shed light on the most valuable home features as reported by more than 1,000 homeowners and home buyers. Here’s what the market really thinks a home is worth based on its most attractive features.

A Matter Of Perception

Though cliche, the old adage “beauty is in the eye of the beholder” rings true when it comes to the housing market.

Added Value Estimation

When asked to estimate the price of a typical home, the combined average among home buyers and homeowners was $314,570. Between the two groups, home buyers estimated the value of a typical home as about $20,000 higher than homeowners. For homeowners, this is good news: They may be underestimating the value buyers place on certain features of their homes. This aligns with current market data, which shows home prices average about $10,000 above asking.

There’s more good news for homeowners, too: the survey results show architectural and exterior features can increase the perceived value of a home. For the biggest boost to a home’s perceived value, an owner should consider adding a two-car garage. This single exterior feature increased a home’s perceived value by more than $39,000, on average – significantly higher than any other interior or exterior feature. If a two-car garage isn’t an option, don’t worry; even a one-car garage increased a home’s perceived value by more than $20,500.

Inside the home, vaulted ceilings translated into the highest perceived value add. In the eyes of home buyers, vaulted ceilings increased a home’s value by more than $27,000. For comparison, homeowners only raised their estimates by $16,747.

The Making Of A Desirable Location

The famous mantra in real estate is “location, location, location.” The message is that a home’s location has a major impact on its value, so much so that some experts would say location can be the single most important factor that affects a home’s value.

Location, Location, Location.

Broadly speaking, a desirable location increases a home’s estimated value by almost $100,000, representing a 30% increase. A good location was even more desirable to home buyers, who perceived location as adding nearly $150,000 in additional value, compared to homeowners who increased a home’s value by just over $80,000 for a good location.

The biggest impact on a location’s desirability was its school district. Being near highly rated schools increased a home’s perceived value by more than $75,000. Home buyers frequently move specifically for access to better schools, with parents even sacrificing lengthy commutes in exchange for a better education for their children.Schools aren’t the only factor influencing a location’s desirability. Among non-school categories, being close to outdoor recreation, such as beaches or parks, added the most value to a home.

Proximity to outdoor recreation increased a home’s perceived value by more than $61,000, on average. For comparison, the next biggest factor influencing a location’s desirability was the amount of crime, but being in a low crime area was only perceived to add about $24,000 in value to a home.Once again, home buyers viewed these positive features as adding a higher value to a home’s value than homeowners did. Home buyers raised their value estimates significantly more than homeowners did when a home was close to outdoor recreation and essential shopping or in a low crime area or desirable community culture.

Schools aren’t the only factor influencing a location’s desirability. Among non-school categories, being close to outdoor recreation, such as beaches or parks, added the most value to a home. Proximity to outdoor recreation increased a home’s perceived value by more than $61,000, on average. For comparison, the next biggest factor influencing a location’s desirability was the amount of crime, but being in a low crime area was only perceived to add about $24,000 in value to a home.

 

Once again, home buyers viewed these positive features as adding a higher value to a home’s value than homeowners did. Home buyers raised their value estimates significantly more than homeowners did when a home was close to outdoor recreation and essential shopping or in a low crime area or desirable community culture.

The Kitchen Is Where The Heart Is

Location may be important, but it isn’t the only factor. While an owner can’t pick up a home and move it, a great kitchen is important to buyers everywhere.

Kitchen Essentials

When thinking about a remodel, one place to start may be the kitchen. Not only did more than half of the respondents agree that a home’s kitchen is of high importance, but an equal number also said they could be convinced to buy just because of an upgraded kitchen. A similar majority of buyers said they’d be unwilling to buy a home with an ugly kitchen.

When upgrading a kitchen, a good place to start may be the appliances. More than nine in 10 respondents said upgraded appliances are very or moderately important. In fact, upgraded appliances were the single most important item on people’s upgrade lists.

Kitchen Accounting

The widespread appeal of a great kitchen is no surprise, and neither is the value it can add. A kitchen upgrade may be costly, but it can really pay off.

Kitchen renovation essentials.

On average, a kitchen renovation added more than $27,000 of perceived value in the eyes of the buyers surveyed.

While upgraded appliances held the broadest appeal, upgraded cabinets were perceived by buyers to be the most valuable renovation. Among home buyers surveyed, upgraded cabinetry increased a home’s perceived value by more than $5,300, compared to the just over $4,600 increase from upgrading appliances or countertops.

The challenge with kitchen upgrades is that they don’t come cheap. On average, homeowners should plan to spend approximately 16% of their home’s value on a kitchen renovation. Once the sticker shock wears off, a kitchen upgrade often adds notable value to a home.

The Importance Of Upgraded Bathrooms

Primary bathrooms are also very important to both homeowners and home buyers. While not everyone loves to cook at home, all homeowners use their bathrooms on a regular basis. So it should come as no surprise that the design and quality of a home’s primary bathroom present a key factor in its perceived value.

Bathroom estimation

More than half of respondents said the design and quality of a home’s primary bathroom is of high importance. And 54% of home buyers said that a nice primary bathroom may convince them to buy a home they wouldn’t consider otherwise. Upgrades taking a bathroom from average to great varied, though.

According to the highest percentage of people, an upgraded shower was the renovation most considered very to moderately important in a primary bathroom. In fact, 72% of respondents placed high importance on a shower upgrade, with other bathroom fixtures coming in close behind. An upgraded shower increased a home’s estimated value by more than $2,600. For the highest dollar value add, owners should turn to the bathroom flooring. Upgraded floors in a bathroom netted an average value increase of almost $2,900.

Finding The True Value Of A Home

There are certain features most homeowners and home buyers agree make a home great. Outside, the top features include a nice garage and large backyard. Inside, people gravitated toward vaulted ceilings and lots of windows. The best rooms to upgrade to increase a home’s sale value are the kitchen and primary bathroom.

A home’s location is also a key determinant of its value, as real estate agents have often declared. For the best location, look at the quality of the surrounding schools. Both homeowners trying to increase their home’s value and home buyers on the hunt for their dream home can benefit from knowing what increases a home’s perceived value.

Methodology And Limitations

This study uses data gathered from 1,002 survey respondents who were either homeowners or home buyers actively in the process of searching for a home. Among the 1,002 respondents, 724 were homeowners, and 278 were home buyers. Respondents ranged in age from 18 to 80 years old with an average age of 40. 555 respondents were men, 442 were women, and five were nonbinary.

In some cases, questions and answers have been rephrased for clarity. To help ensure accurate survey responses, all participants were required to identify and correctly answer an attention-check question. These data rely on self-reported data. Potential issues with self-reported data include, but are not limited to, exaggeration, recency bias, exaggeration, telescoping and other attribution errors of respondents.

Fair Use Statement

Homeowners and home buyers can benefit from knowing what features are the most valuable in today’s market. Please feel free to share this study with anyone who could benefit from its findings as long as it is for noncommercial purposes only, and includes a link back to this page so the designers can get credit for their work.

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