Remodelling Your Kitchen: Cost VS Value

A few weeks ago, we wrote a blog about how to determine if it makes sense to move or improve. This week, we will begin a series that discusses various home remodelling projects and their return on investment should you sell your home. We’ll start with kitchen remodels and explore the ROI of three upgrade levels.

The kitchen is the heart of the home, where family and friends often gather. In addition to being a functional space, today’s kitchen should also allow for some level of socializing.

Based on the 2015 Cost VS Value reports for San Jose and San Francisco that weigh numerous remodelling projects and their ROI, a kitchen can definitely reap you many rewards, both while living in your home and when you sell.

The Cost VS Value reports give examples for three levels of kitchen remodels: the mid-range minor, the mid-range major and the upscale along with costs and the amount recouped upon the sale of the home. Each is based upon a 200 square foot kitchen with 30 linear feet of cabinetry. Each level of remodel is outlined below.

Mid-Range Minor Kitchen Remodel:

  1. Leave cabinets boxes and replace with raised-panel doors and drawers and add new hardware
  2. Replace existing counters with new laminate countertops
  3. Replace existing flooring with new, resilient flooring material
  4. Repaint walls and trim
  5. Add new mid-range sink and faucet
  6. Replace oven and cooktop with energy efficient models

Cost: $23,000 in San Jose and $24,000 in San Francisco

Mid-Range Major Kitchen Remodel:

  1. Replace existing cabinets with new, semi-custom wood cabinetry including a 3X5 island
  2. Install new laminate countertops
  3. Install standard double tub stainless steel sink and single lever, standard faucet
  4. Replace oven, cooktops, venting system, add built-in microwave, dishwasher and garbage disposal
  5. Install new, resilient flooring
  6. Install custom lighting
  7. Paint walls, ceiling and trim

Cost: $64,000 in San Jose and $69,000 in San Francisco

Upscale Kitchen Remodel:

  1. Top-of-the-line custom cherry cabinetry with built-in sliding shelves and other internal accessories
  2. Stone countertops with imported ceramic or glass tile backsplash
  3. Built-in refrigerator, cooktop and 36” commercial grade range/vent hood, warming drawer, trash compactor, built-in combo microwave and convection oven
  4. High-end undermount sink with designer faucet and water filtration system
  5. New general, task and under cabinet lighting
  6. Cork flooring
  7. Repaint walls, ceiling and trim

Cost: $127,000 in San Jose and $134,000 in San Francisco

One would assume that the more high-end the kitchen remodel, the higher the return on investment. After all, who doesn’t love a well-appointed kitchen? Interestingly enough, that assumption does not hold true, according to the Cost VS Value reports.

The minor kitchen remodel recoups 131.5% of its value in San Jose and 147% in San Francisco while the major remodel has an ROI of 88% in San Jose and 109% in San Francisco. Coming in a distant third is the upscale kitchen, with 80.5% and 89% respective return on investment.

The moral of this remodelling story: if you are remodelling primarily to add value to your home when you put it on the market, a minor remodel will net more cash in your pocket. An upscale remodel won’t provide the same ROI and should be done to improve your lifestyle, the functionality of your kitchen and to meet your taste and personality, as it definitely doesn’t provide the most resale bang for your buck as either of the mid-range updates.

Next time, we’ll explore how bathroom remodels measure up and whether this same cost to value ratio holds true.