Do Remodels Yield ROIs?

In the early 2020s, homeowners locked in mortgages with historically low interest rates. In December 2020, for example, rates dropped to an average of 2.67%. Today, rates average between 6% and 7%.¹ Higher rates, coupled with an increase in home prices, give owners less incentive to buy or sell—and all the more reason to stay put (if they’re able).

The more time you spend in your home, the more you start to think about changing your space to better suit your needs. Renovations are an effective way to customize the home you already own, but they tend to cost a pretty penny. And according to the National Association of REALTORS®’ (NARS) 2025 Remodeling Impact Report, they don’t often yield a 100% return on investment. But depending on what you’re looking to accomplish, a remodel or renovation can still be well worth the cost, time, and energy put into it—especially if you’re preparing your home for the next phase of life, like retirement. 

Remember your reason for remodeling

As much as we’ll be focusing here on cost recovery and the financial “return on investment” in certain home improvement projects, it’s just as important to emphasize the reason you pursue a home renovation in the first place.

People don’t often decide to turn their home into a construction zone purely for the potential future financial gain. Rather, you renovate because you have a need or want to change your home to better suit your needs. If you’re caring for an older family member, for example, you might decide to build an in-law suite onto the back of the house. Or, as your family grows, you might decide to turn part of your basement into a game room.

Renovations are often born out of necessity, and their measure of success doesn’t always depend on what you get back when the time comes to sell the house. Your personal satisfaction, comfort, and happiness are important indicators as well. 

Example: Renovating your home for retirement

Rather than downsizing or moving into a retirement community, some people prefer to retrofit their family home into a more suitable living space for retirement. Doing so enables them to “age in place,” which can be a preferable choice over trying to relocate later in life. To accomplish this, you can make targeted home upgrades that improve accessibility and safety around the home.

Common modifications for aging in place include:

• Installing curbless walk-in showers
• Widening doorways for wheelchairs or walkers
• Adding grab bars in bathrooms
• Improving lighting
• Replacing carpet with hardwood or non-slip flooring
• Lowering countertop heights or swapping hardware for easier grip

While retirement-focused renovations may not recoup all of their cost when the home sells, these upgrades can help you stay safe and more independent in the home you love. They may also help you delay the need to move to an assisted or independent living community. Depending on where you live, these retirement communities can be expensive. The median cost ranges from $3,100 to $4,995 a month.³ 

Resale value on large renovations and additions

Now, let’s address the biggest question first: Which major renovations give you the biggest bang for your buck?

According to the NARS report, the top major renovations or additions for recovering costs include:² 

• Converting a basement to a living space: 71% cost recovery
• Converting an attic to a living space: 67% cost recovery
• Complete kitchen renovation: 60% cost recovery
• Adding on a new bathroom: 56% cost recovery
• Creating a new primary suite: 54% cost recovery
• Renovating a bathroom: 50% cost recovery

Notably, most of these renovations scored perfect or near-perfect “Joy” scores in the NARS report as well, which indicates how happy a homeowner feels after a project is completed.²  

While large-scale remodels don’t tend to yield a dollar-for-dollar return on investment, they can certainly add to the homeowner’s personal well-being and satisfaction. If you’re planning to stay in your home for another 10 or 15 years, going for that open-concept kitchen or accessible first-floor full bathroom may “pay for itself,” so to speak, in quality of life, even if it doesn’t break even during a future home sale.

The bigger opportunity for ROI? Smaller upgrades and minor renovations

Interestingly enough, the NARS report revealed that the top home projects for ROI weren’t major room additions or remodels—they were smaller cosmetic and energy-efficient upgrades.² Considering there’s less cost to recover come sale time, it makes sense why minor, less expensive upgrades can more easily earn their money back.

The projects with the highest percentage of cost recovery include:² 

• Installing a new steel front door: 100% cost recovery
• Renovating a closet: 83% cost recovery
• Installing a new fiberglass front door: 80%
• Installing new vinyl windows: 74%
• Installing new wood windows: 71%

What motivates homeowners to remodel?

Interestingly, only 18% of homeowners reported remodeling because they planned on selling the home within the next two years.² 

The top reasons homeowners take on a renovation project include:² 

• Upgrading worn-out surfaces or materials (27%)
• Improving energy efficiency (19%)
• Feeling ready for a change (18%)

Housing affordability also played a minor role for some people, with 9% citing rising prices or mortgage rates as a reason to stay and remodel rather than move.² 

Covering the cost of a renovation

The NARS report shared that the majority (54%) of homeowners used a home equity loan or line of credit (HELOC) to cover the cost of a renovation or home upgrade. Another 10% used credit cards, and 29% pulled from their savings.² 

How you pay for a renovation is worth considering, especially if you’re focused on maximizing your ROI. A line of credit or loan can be costly, since you’re paying back the amount borrowed plus interest. 

Credit cards, especially, carry some of the highest interest rates available. In early 2025, the average credit card interest rate was 21.37%.⁴ Your total out-of-pocket cost for a renovation paid for with a credit card can be much higher than the initial project price. Even HELOCs or home equity loan repayments carry interest rates, though typically at a lower rate (since your home is held as collateral).

So… will you get your money back on a home remodel?

In purely financial terms, probably not. Most remodels, especially high-cost ones, won’t yield a 100% return if you sell your home.

But as we’ve discussed, the financial value of a remodel isn’t the only factor to consider here. 

If a renovation improves your safety, comfort, joy, or ability to remain in your home long-term, then it can certainly be worth the cost. For retirees in particular, the right renovation could mean continuing to live in a familiar community, preserving independence, and avoiding the emotional and financial cost of moving.

Thinking of remodeling your home? 

Whether you're planning a modest refresh or a major remodel, it’s important to consider what you really want out of this experience—and what your long-term measure of fulfillment and success will be. 

You can try asking yourself questions like:

• Will this make my daily life easier or more joyful?
• Does it improve the safety or functionality of my space?
• How long do I want to stay in my home?

And above all, don’t discount the return on happiness. A beautiful, functional, and accessible home can bring you joy for many years to come. If you haven’t already, you may want to speak to a financial advisor about incorporating a home remodel into your greater financial plan—and what the cost of borrowing money or pulling from savings could look like.