Feb 09 2022

What to Look for to Grow a Home’s Value

It can be difficult to know which home features you really want, which add value to the home, and which don’t. Let’s look at some things that contribute to a home’s value over time.
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Scrolling through lists of home features as you shop for a new house can be a dizzying experience. It can be difficult to know which home features you really want, which add value to the home, and which don’t. Let’s look at some things that contribute to a home’s value over time, and ways in which you can add value yourself.

The Features Most Folks Want

  • A dedicated laundry room. Turns out, the old saying about airing your dirty laundry in public is true; a separate laundry room is one of the most desired features with home buyers, according to the National Association of Home Builders. People will pay for the privilege of keeping dirty laundry out of their living spaces.
  • Three bedrooms. Three is the magic number when it comes to how many bedrooms the majority of home buyers want. Overall, 47% want three, compared to 32% who are looking for four bedrooms or more. Though drilling down on NAHB stats shows that 47% of married couples who have children want a minimum of four bedrooms.
  • Open floor plans are highly desirable. So much so that a whopping 85% of home buyers say they want free-flowing space between the dining room and kitchen, while 79% want to have an open space between the family room and the kitchen, and 70% want the same between the family room and the dining room.
  • Walk-in pantry. One of the most popular kitchen features with home buyers, walk-in kitchen pantries means more living space and less storage in the kitchen. Lots of people these days buy in bulk at big box stores, and it’s nice to have a place to store all those non-perishables mere feet from the cooking area.
  • Two bathrooms are perfect. But not by an overwhelming majority: 37% of homebuyers want two bathrooms; 21% are looking for 2.5; while 26% wish to have more than three baths.
  • Full bath on the first floor. According to the National Association of Homebuilders, having a half-bath on the first floor increases an average home’s value by 10%. Which is impressive enough. But that doubles to 20% if it’s a full bathroom: toilet, sink, shower, and tub. From families with young children they can bathe on the main floor to older adults who wish to climb stairs less, nearly everyone loves a full bath on the first level.
  • Two-car garage. The majority of prospective home buyers, 42%, want a two-car garage, more than double those that want space for just one car (18%), and those looking for a three-or-more car garage (12%).
  • The suburbs win with location. This is clear with the top sought after aspects of prospective areas to buy a home in, which are walkable suburban communities with trails for walking and jogging, close to both parks and ample retail options.

Areas Where You Can Add Value

When looking for a new home, it’s a good idea to keep an eye out for untapped potential, namely areas where improvements will pay off with increased resale value.

  • Exterior illumination. This top feature on the NAHB’s list is also one of the cheapest to install. A few hundred dollars can illuminate a home’s exterior in dramatic fashion, with walkway lights, pendant lights, and strategically positioned spotlights. It’s a small investment with an attention-grabbing payoff.
  • Upgrades over revamps. While going all-out on a full upscale kitchen remodel may seem like a solid investment, Remodeling magazine’s data shows that kind of large-scale overhaul brings in a 53% return when balancing cost against added value. A more moderate kitchen upgrade brings in an 81% return. The same is true with bathrooms; conservative updates see returns in the 70% range while extensive remodels return 56% on average.
  • Ceiling fans. Simple, energy-efficient, and comparatively cheap, ceiling fans are desired by the overwhelming majority (83%) of potential home buyers. Energy.gov says any rooms in which you install ceiling fans should have heights of at least eight feet.
  • Energy Efficiency. From energy-efficient replacement windows to Energy Star-certified appliances, most buyers are looking for homes that don’t waste money with utility bills.
  • Side-by-side kitchen sink. Most people want a double sink in the kitchen. You can install one for about $500 and have a kitchen feature that more than 80% of homebuyers want.
  • Adding usable square footage. Square footage has a direct impact on home value; bigger homes fetch bigger prices. But beyond additions such as second stories, consider making existing space more livable. Building a deck or finishing a basement are two of the best ways to create more usable space. Patios and front porches are two of the most wanted outdoor features for buyers, according to the NAHB.

And if you’re wondering how to pay for these value-adding improvements, home refinancing may be the perfect way to use the equity you already have in your home to get the cash you need for home improvements.

And some things that may not add value…

There are some common misconceptions about things folks think add value to homes, but actually don’t.

  • Swimming pools top the list; while pools can increase the value of a home by up to 7%, they also come with maintenance costs (and upkeep hassles) some potential buyers won’t want.
  • Overbuilding, such as a second story in an area of one-story homes, won’t considerably boost the resale value if the home goes beyond the neighborhood norm.
  • High-end upgrades are great — if they’re consistent throughout the house. A sleek new kitchen won’t move the needle on the resale price very much if that’s the home’s only major renovation.
  • Wall-to-wall carpeting. Processed with chemicals and known to trap allergens — not to mention the cleaning issues — carpeting can be a turnoff to would-be buyers. Best to tear out the carpeting and put in wood flooring.

Ultimately, the features you want in your new home, and those you wish to add, are matters of personal choice. When you do find the home you desire, City Lending is here for your mortgage needs from purchase to home improvements.

These days, more and more people are looking to buy their dream homes, especially as remote work and work-from-home setups have become an enduring trend. A 15 point increase in requests for home tours and other home-buying services, along with a 11% rise in Google searches for homes, indicate an uptick in demand to buy houses in the country. However, there is a definite worry about affordability when it comes to housing, especially as hefty price tags on available residences have kept the market just as competitive as before, if not more.

According to the latest reports from analysts, it’s not all bad for existing homebuyers and aspiring house hunters. As previous data shows, timing matters in the housing market, and working on different approaches to home buying – like through a reliable lender – can help advance you towards more affordable housing goals. Below, we discuss whether house hunters should buy now or wait, and why.

 

What is your financial situation?


Counter to the rise in home demand, there is a considerable lack of supply. Along with rising prices and interest rates, the housing market may seem like a highly competitive space with wealthy homeowners fighting for what little property is left. It can be overwhelming, but knowing where you stand financially can help you better strategize your home buying journey. Following the four key components of affordability, ask yourself:

  • How much do you have saved for a down payment?

  • How much does your household earn?

  • What debts do you carry?

  • What is your credit score?

 

Familiarizing yourself with these components will help inform your decision on whether or not to wait. For example, taking the time to improve your credit scores before committing can save you from higher interest rates in terms of your monthly mortgage payments. Alternatively, many young homebuyers are compromising by living with family for a significant amount time to save up for a down payment. Getting this out of the way when you’re able to can help you get better loans to buy sooner than later in case interest rates end up increasing.

What kind of home is best for you?

Buying a home is a huge purchase and a big commitment. With shifts to digital and remote ways of working taking place in recent years, this has provided homebuyers with opportunities to be more flexible when buying homes. Homes in areas away from busy cities and urban hubs, for example, are considerably cheaper. This makes them a perfect option for buyers who work from home, or aren’t required to be present in the office on a consistent basis.

The lifestyle you expect to live is as much a factor to consider as money. Condos and townhouses offer lower maintenance costs in the long run, and are perfect for smaller households when compared to single-family homes. If the household grows, homebuyers looking for a side income can even invest in renting out purchased properties to passively earn back what they spent and look into bigger properties for family use.

What does the future look like?


In a previous post, we talked about the rising mortgage and interest rates. While the market may seem bleak or intimidating in its current condition, housing experts also believe factors such as supply have a high chance of returning to pre-pandemic levels by the end of 2024. If you are financially able, buying now while others may be intimidated by the prices can give you an edge. Conversely, taking some time to get your finances in order can benefit you when it comes to securing better loans and lower interest rates.

Working with experts can help you make better decisions for the loans you need, making sure you don’t get trapped with high interest rates or hidden charges. The future of fintech suggests that big data is the future of loans, as more online lenders are now using algorithms, which predict potential defaults better than FICO scores do. Data is also leveraged precisely to identify customers who fit various products well — which can give you peace of mind, as an aspiring borrower. Here at City Lending for example, we find the right programs to fit your needs and profile, making sure you get some of the lowest down payments and interest rates along with a premium service.

And if you’re still unsure, it’s worth considering that waiting it out in the market’s current wild conditions could result in even higher interest rates in the future. At the end of the day, buying a house is ultimately a huge investment, which comes with benefits such as privacy and a financial investment that for the most part will weather most economic storms.

Find out if this is the right time for you to get a house by contacting one of our loan officers today.

 

Content intended only for the use of citylendinginc.com

Written by Alicia Christopher

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