The construction industry is continually evolving, influenced by economic shifts, homeowner preferences, and technological advancements. The 37th annual Cost vs. Value Report by Zonda offers invaluable insights into which home improvement projects are yielding the highest returns on investment (ROI), especially critical for home sellers and industry professionals aiming to maximize value.
–

Project
Job Cost
Resale Value
Cost Recouped (%)
Garage Door Replacement
$4,513
$8,751
193.9
Entry Door Replacement | Steel
$2,355
$4,430
188.1
Manufactured Stone Veneer
$111,287
$171,291
153.2
Grand Entrance | Fiberglass
$11,353
$11,054
97.4
Minor Kitchen Remodel | Midrange
$27,492
$26,406
96.1
Siding Replacement | Fiber-Cement
$20,619
$18,230
88.4
Deck Addition | Wood
$17,615
$14,596
82.9
Siding Replacement | Vinyl
$17,410
$13,957
80.2
Bath Remodel | Midrange
$25,251
$18,613
73.7
Deck Addition | Composite
$24,206
$16,498
68.2
Window Replacement | Vinyl
$21,264
$14,270
67.1
HVAC Conversion | Electrification
$18,000
$12,242
66.1
Window Replacement | Wood
$25,799
$16,222
62.9
Roofing Replacement | Asphalt Shingles
$30,680
$17,461
56.9
Major Kitchen Remodel | Midrange
$79,798
$39,587
49.5
Bath Remodel | Universal Design
$40,750
$20,148
49.4
Roofing Replacement | Metal
$49,928
$24,034
48.1
Bath Remodel | Upscale
$78,840
$35,591
45.1
Major Kitchen Remodel | Upscale
$158,530
$60,176
38.0
Bathroom Addition | Midrange
$58,649
$20,334
34.7
Bathroom Addition | Upscale
$107,477
$34,997
32.6
Primary Suite Addition | Upscale
$339,513
$81,042
23.9
–

Exterior Enhancements Lead the Charge

In 2024, exterior improvement projects have maintained their dominance in providing the best ROI for home sellers. An overwhelming majority of the top ROI projects—nine out of ten—are focused on exterior upgrades. These enhancements are crucial, as real estate professionals emphasize curb appeal as a significant factor in determining a home’s market price.
The projects leading the pack include:
–
  • Garage Door Replacement: Achieving an average ROI of 194%.
  • Exterior Door Replacement: Coming in close with an 188% ROI.
  • Manufactured Stone Veneer Installation: Offering a robust 153% ROI.
–
Interestingly, the only interior project in the top five, a minor kitchen remodel, provides a substantial 96% ROI, demonstrating that strategic interior updates can also significantly impact a home’s selling price.
–

Record-Breaking Project Valuations

This year has seen unprecedented increases in project valuations, especially for garage and entry door replacements. These projects almost doubled in value compared to the previous year, with ROIs nearing 200%. This surge is attributed to the current housing market dynamics, which include higher mortgage rates and substantial homeowner equity. Such conditions favor discerning move-up buyers who value quality and distinctiveness in home features, making updated exteriors a selling point that can command a premium.
–

The Shift in HVAC Investment

Despite being a top performer previously, the ROI for converting to electric heat pumps has seen a decline, falling to 12th place with a 66% ROI. This drop is likely due to lower natural gas prices and increased electricity costs, alongside a broader slowdown in consumer spending due to economic pressures. However, industry analysts anticipate a rebound in heat pump investments as incentives from the Inflation Reduction Act become more widely recognized.
–

Regional Variations and Long-term Trends

The Cost vs. Value report also highlights significant regional differences in ROI, with the Pacific and New England regions leading. These areas report higher project valuations without proportionately higher costs. Conversely, some regions like the Mountain and East South Central areas have seen declines in ROI, underscoring the importance of local market conditions in investment decisions.
–
A historical review of the data shows that while project costs have consistently risen over the past decade, the perceived value of these projects has fluctuated. Nevertheless, 2024 marks a positive shift with a 5.2% increase in average ROI across longstanding projects, suggesting a recovery from post-pandemic market disruptions.
–

Future Outlook for Construction Professionals

For building professionals, the Cost vs. Value report is more than just numbers—it’s a tool to facilitate deeper conversations with clients about the value of their investments. By starting discussions with the potential resale value, professionals can address common client concerns about costs and then guide them to appreciate the comprehensive benefits of quality craftsmanship, safety, and long-term durability.
–
The report encourages contractors to use the standardized markup (10% on materials and labor) as a conversation starter, allowing them to demonstrate the intrinsic value added through skilled labor and superior materials. This approach not only helps in justifying project costs but also positions the contractor as a trusted advisor who can deliver exceptional results.
–
In conclusion, as the construction industry navigates through economic uncertainties and changing consumer preferences, the insights from the Cost vs. Value Report serve as a crucial resource for builders, remodelers, and trade companies. By understanding and leveraging these trends, small businesses in the construction sector can optimize their strategies and position themselves for success in a competitive market. Additionally, Small Business Growth Partners offers an exclusive tool, the Business Diagnostic & Plan of Action (BPA), developed in partnership with your Home Builder Association. This tool is available as a member benefit at no additional cost and provides a detailed, comprehensive analysis of your business, perfectly complementing the insights gained from the Cost vs. Value Report. Through SBGP’s BPA, contractors can gain further clarity on their business strategies, enhancing their ability to thrive even in challenging market conditions.