Housing -This and That April 18, 2023

Building Equity with a Home Improvement Plan

Your home is typically the largest financial investment you’ll ever make. Over time, we expect the equity in our homes to increase through increasing property values and a decreasing mortgage balance. While homeowners recognize the need to maintain the home in good condition, one of the best ways to maximize your home equity is to create a plan for ongoing improvements and updates.

For most of us the interest in a remodeling project results from either an unexpected event or financing for a specific project. ie major kitchen overhaul.  But by planning for ongoing improvements, any homeowner can engage in updates to stay current with market trends. Also budgeting for smaller upgrades ahead of time will increase the likely hood of you doing them.

As far as updates go, you don’t want to put all your eggs in one basket, as it will time stamp the home. Trends often come and go. As tastes change, homebuyers are attracted to new features. Outdoor kitchens, great room configurations, and home offices are just a few of the trends from the past few years. More timeless desires include more square feet, chef’s kitchens, and spacious bathrooms. To stay ahead of trends and build equity, smart homeowners should build a plan for continuous improvements.

In addition to developing a fund, build a road map for upgrades and enhancements. Consider the life span of major systems, such as the roof or HVAC systems; is end-of-life a good time to switch to solar energy?  Many people don’t think of home appliances when doing updates, but they are one of the first things a buyer will think of.  Kitchen styles change dramatically every 10 years on average. Start saving for a kitchen style change on the same schedule. Can be a complete remodel or simply a new countertop. You may not plan to sell your home for years, but things change. No one wants to consider listing a home that is outdated, taking the financial hit that comes with it. Now is the time to plan for regular updates to build equity, and you’ll enjoy the benefits of the changes too.