A new study from Rocket Homes℠ aims to shed light on the most valuable home features as reported by more than 1,000 homeowners and home buyers. According to the study, here’s what the market really thinks a home is worth based on its most attractive features.
A matter of perception
When asked to estimate the price of a typical home, the combined average among home buyers and homeowners was $314,570. Between the two groups, home buyers estimated the value of a typical home as about $20,000 higher than homeowners. For homeowners, this is good news: They may be underestimating the value buyers place on certain features of their homes. This aligns with current market data, which shows home prices average about $10,000 above asking.
There’s more good news for homeowners, too: the survey results show architectural and exterior features can increase the perceived value of a home. For the biggest boost to a home’s perceived value, an owner should consider adding a two-car garage. This single exterior feature increased a home’s perceived value by more than $39,000, on average—significantly higher than any other interior or exterior feature. If a two-car garage isn’t an option, don’t worry; even a one-car garage increased a home’s perceived value by more than $20,500.
Inside the home, vaulted ceilings translated into the highest perceived value add. In the eyes of home buyers, vaulted ceilings increased a home’s value by more than $27,000. For comparison, homeowners only raised their estimates by $16,747.
The making of a desirable location
Broadly speaking, a desirable location increases a home’s estimated value by almost $100,000, representing a 30% increase, according to the report. A good location was even more desirable to home buyers, who perceived location as adding nearly $150,000 in additional value, compared to homeowners who increased a home’s value by just over $80,000 for a good location.
The biggest impact on a location’s desirability was its school district. Being near highly rated schools increased a home’s perceived value by more than $75,000. Home buyers frequently move specifically for access to better schools, with parents even sacrificing lengthy commutes in exchange for a better education for their children.
Schools aren’t the only factor influencing a location’s desirability. Among non-school categories, being close to outdoor recreation, such as beaches or parks, added the most value to a home, the report showed.
Proximity to outdoor recreation increased a home’s perceived value by more than $61,000, on average, the report stated. For comparison, the next biggest factor influencing a location’s desirability was the amount of crime, but being in a low crime area was only perceived to add about $24,000 in value to a home. Once again, home buyers viewed these positive features as adding a higher value to a home’s value than homeowners did. Home buyers raised their value estimates significantly more than homeowners did when a home was close to outdoor recreation and essential shopping or in a low crime area or desirable community culture.
The kitchen is where the heart is
When thinking about a remodel, one place to start may be the kitchen. Not only did more than half of the respondents agree that a home’s kitchen is of high importance, but Rocket’s report showed an equal number also said they could be convinced to buy just because of an upgraded kitchen. A similar majority of buyers said they’d be unwilling to buy a home with an ugly kitchen.
When upgrading a kitchen, a good place to start may be the appliances. More than nine in 10 respondents said upgraded appliances are very or moderately important. In fact, upgraded appliances were the single most important item on people’s upgrade lists.
The widespread appeal of a great kitchen is no surprise, and neither is the value it can add. A kitchen upgrade may be costly, but it can really pay off.
On average, a kitchen renovation added more than $27,000 of perceived value in the eyes of the buyers surveyed, according to the report.
While upgraded appliances held the broadest appeal, upgraded cabinets were perceived by buyers to be the most valuable renovation. Among home buyers surveyed, upgraded cabinetry increased a home’s perceived value by more than $5,300, compared to the just over $4,600 increase from upgrading appliances or countertops.
The challenge with kitchen upgrades is that they don’t come cheap. On average, homeowners should plan to spend approximately 16% of their home’s value on a kitchen renovation. Once the sticker shock wears off, a kitchen upgrade often adds notable value to a home.
The importance of upgraded bathrooms
More than half of respondents said the design and quality of a home’s primary bathroom is of high importance. And 54% of homebuyers said that a nice primary bathroom may convince them to buy a home they wouldn’t consider otherwise. Upgrades taking a bathroom from average to great varied, though.
According to the highest percentage of people, an upgraded shower was the renovation most considered very to moderately important in a primary bathroom. In fact, the report shows 72% of respondents placed high importance on a shower upgrade, with other bathroom fixtures coming in close behind. An upgraded shower increased a home’s estimated value by more than $2,600. For the highest dollar value add, owners should turn to the bathroom flooring. Upgraded floors in a bathroom netted an average value increase of almost $2,900.
Finding the true value of a home
There are certain features most homeowners and home buyers agree make a home great. Outside, the top features include a nice garage and large backyard. Inside, people gravitated toward vaulted ceilings and lots of windows. The best rooms to upgrade to increase a home’s sale value are the kitchen and primary bathroom.
A home’s location is also a key determinant of its value, as real estate agents have often declared. For the best location, look at the quality of the surrounding schools. Both homeowners trying to increase their home’s value and home buyers on the hunt for their dream home can benefit from knowing what increases a home’s perceived value.
To view the full report by Rocket Homes, click here.