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Which home improvements give the best payback?

In this depressed housing market, very few home improvements will return a profit to you. The costs generally outweigh the benefits, and the market is generally not rewarding sellers who spend large sums on updating or upgrading.

If you're thinking about remodeling your kitchen, or finishing your basement, you probably want to get your investment back when you sell your home. But when it comes to payback value of home improvements, some are definitely more profitable than others. As a general rule, kitchen and bathroom projects usually return 70-90%.Things like adding rooms or finishing basements tend to pay back the least.Finishing a basement usually returns less than 50%.

There are a number of factors that go into determining how well a project will pay back. Payback value depends a lot on the local market conditions in your area. If the local market is particularly depressed with lots of inventory, then homes are not moving and you can expect a very low payback.  

The type of project you do and how it fits in with other homes in the area can have a big influence on payback too. If you put your money into the wrong type of improvement, you won't get your money back. But if you're smart about what you do, you can make money. The payback will be better on improvements that are in demand and conform to neighborhood standards. For example, adding a second bathroom in a neighborhood where most homes have two bathrooms will give a better return.  On the other hand, building a large addition that makes your home twice as big as the other homes on the block won't pay back very well. Likewise, the popularity of a project will factor into how much it pays back. An improvement heavily customized to your wants and needs won't pay back as well as something more common to other homes in the neighborhood.

Another factor to consider is the cost of the improvements. If you can do the work yourself, you can save significantly on the cost of the project and greatly improve the chances of payback.

The list below is compiled from several published surveys and shows typical payback for some popular remodeling projects: