How Much Will a Kitchen’s Remodel Increase My Home’s Value?

is remodeling kitchen worth it

Whether you’re thinking about gutting your kitchen down to the studs, or just updating your orange oak mid-90’s cabinets, you’re probably wondering how much money you’ll be able to recoup from a kitchen remodeling project.

What’s the ROI in a Kitchen Remodel?

Let’s cut to the chase: what kind of return can you expect on a kitchen remodel?

You probably don’t want to hear, “It depends”, but the truth is, it does. 

If your motivation for remodeling your kitchen is directly tied to the value of your home, then the scope of your project should be determined by the actual ROI. While it would be amazing to plug a number into a calculator and receive a commensurate rate of return, that simply isn’t possible.

Instead, let’s start with a basic budget — the kitchen remodeling rule of thumb is to spend 5-15% of your home’s value on a kitchen remodel. 

Example: For a $300,000 house, your kitchen remodeling budget will be between $15,000 to $45,000.

Right in line with this rule, nationwide stats from remodeling website HomeGuide indicate that most homeowners spend between $12,000 and $21,000 on their kitchen remodel. 

You should also consider that the ROI for a minor kitchen remodel ($21,000) is 81%. The ROI for a major kitchen remodel ($63,000) is 59%. Just like bathroom remodels, the ROI on a kitchen remodel decreases the more you move into high-end finishes like custom cabinetry, marble countertops, and Viking stoves. 

Why a Remodeling Project’s ROI Depends on Your Neighbor’s House

“Overbuilding” refers to the phenomenon of investing so much money in a home remodel that no comps can be found when a house is listed on the MLS. Returning to our example from above, a home that is surrounded by $300,000 homes can reasonably ask for $315,000 if the kitchen has gone through a minor remodel.

On the other hand, if the homeowners have opted for a high-end remodel with a price tag of $100,000, it’s highly unlikely that they’ll get their  $400,000 asking price. The closer a home is to the comps in the neighborhood, the more likely it is that the bank will approve the loan.

As you compare your home against those in your area, you should ask yourself these questions:

  • How dated is my kitchen? 
  • How old is my home? 
  • What are the homes like in my neighborhood? 
  • How many of my neighbors’ homes are updated? 
  • How much is my home worth?

If your neighborhood is full of 40-year-old homes and the majority of them have remodeled kitchens, updating yours makes sense. If the majority of homeowners in your neighborhood have held off on remodeling, a minor renovation will bring your home in line with area comps more than a major renovation would.

What Does an Average Kitchen Remodel Look Like?

A major factor that sets an average kitchen remodel ($12,000 to $21,000) apart from a high-end kitchen remodel is that it doesn’t move walls or change the plumbing. Instead, it takes a cost-effective approach to the more expensive parts of the remodeling project. 

A homeowner that’s focused on a sensible remodel that will give them the best return may choose to:

Purchasing brand-new cabinets consumes nearly one-third of the entire remodeling budget, so by deciding to reface or repaint them, a homeowner can substantially decrease the cost of the project. The type of material chosen for the project will also affect the budget, such as going with slate countertops instead of granite or choosing an affordable flooring option.

Specifically remodeling so that you can place your home on the market means you are probably making different design choices than if you were remodeling for your own enjoyment. How neutral should your design choices be? 

Go for timeless over trendy so that you can appeal to a wider range of buyers. White cabinets and granite countertops continue their reign as two of the most popular kitchen design elements, and nine out of ten homeowners still prefer stainless steel appliances over any other kind. Painting your kitchen walls a neutral color is another way to quickly project a fresh, timeless look into your kitchen.

Instead of Remodeling, Should You Replace All of Your Appliances?

Speaking of stainless steel appliances, what if you choose to replace all of your appliances instead of remodeling? If you’re considering investing in all-new appliances to entice potential buyers, you should consider carefully what kind of buyers will be interested in your property. 

For first-time homebuyers on a tight budget, a home with brand-new appliances has huge buyer appeal because it reduces the buyer’s out-of-pocket costs. New homebuyers may have been able to scrape together enough for a down payment, but they may not have any extra funds to update fixtures or appliances. A move-in ready home with up-to-date appliances will certainly appeal to them.

Experienced buyers in the mid-range of home values may expect newer, but not brand-new appliances. In this instance, it’s best to address your appliance deficits. Upgrading the black-fronted dishwasher to match the rest of the stainless steel appliances makes more sense than purchasing all-new appliances, especially when the appliances you have are only a few years old. 

Buyers in an upscale neighborhood may be less interested in the appliances you choose because they’re planning on tearing the kitchen down to the studs and remodeling completely with high-end or restaurant-quality appliances. If your home is in a higher-end neighborhood where buyers are more likely to purchase a home and then remodel it to suit their needs, ask your real estate agent if investing in newer appliances makes sense for your home. 

The Bottom Line

Your real estate agent can give you a comparative market analysis (CMA) so that you can see how your home measures up to other homes in the area. With current local knowledge, a trusted agent can tell you what buyers are looking for so you don’t overbuild your kitchen remodel in your quest to update your home to current market standards. 

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