Renovating isn't just about knocking down walls or picking out tile; it's about building a space that truly feels like home. It's exciting to dream about a new kitchen or a finished basement, but the price tag can feel overwhelming when you don't know where to start. We're here to help you navigate the numbers so you can build the home you love without compromising your financial wellness.
Project cost estimates for common upgrades
If you've ever watched a home improvement show, you know that kitchens and bathrooms generally cost the most. According to sources like HomeAdvisor, Houzz, Rocket Mortgage, and Realtor.com, these are labor-intensive projects that require skilled craftsmanship for cabinets and countertops, plus extensive electrical and plumbing work to make everything function correctly.
One silver lining is that you can alter the scope of your project to reduce costs at any time, though it's much better to do this before work begins. Just remember that cutting costs often involves trade-offs with the quality of appliances and finishes.
Here is a breakdown of costs for other common exterior and interior projects, based on estimates from Architectural Digest, Forbes HOME, and Angi. Keep in mind these are ranges, and your specific costs could be higher or lower depending on the size of your house and the quality of materials you choose.
- Central air: $3,800 to $7,600
- New windows: $4,500 to $20,000
- Furnace (heat pump): $2,800 to $11,000
- Siding: $8,420 to $54,250
Average spending by homeowner type
It's hard to pin down a single number because every home and project is unique. Industry experts provide different estimates, so it's helpful to look at a few sources to see where you might fit in.
According to research by Houzz in 2022, Americans spent an average of $18,000 on home renovation projects in 2021. However, the top 10% of spenders invested a massive $100,000.
Your stage of homeownership matters too. Recent homebuyers spent the most, averaging $30,000. Short-term homeowners spent approximately $19,000, while long-term homeowners spent around $15,000.
HomeAdvisor reported a different range, showing average renovation costs between $17,947 to $78,308, with a national average of $48,049.
The National Association of Home Builders found distinct spending patterns for new versus existing owners. New homebuyers typically spend around $12,000 on renovations, $5,000 on furnishings, and $4,000 on appliances in their first year. For those purchasing existing real estate, expenses are generally lower. These buyers typically spend around $6,000 on renovations, $2,500 on furnishings, and another $2,500 on appliances.
Hidden costs you might forget
Material costs are just the beginning. According to the 2020 US Houzz & Home study, approximately 31% of homeowners exceeded their renovation budgets in 2019. To avoid joining that statistic, you need to account for these often-overlooked expenses.
Taxes
It's great to increase the value of your home, but higher valuations can lead to increased property taxes. You likely won't see this immediately, but you might see a bump the next time your house is assessed. Assessment schedules vary, but they usually occur every one to five years. It's smart to check with your local tax department to see how frequently properties in your area are assessed.
Permits
Building permits are a necessary part of the process. Fees can range between $50 to $300 for small plumbing and electrical jobs, and $500 to $2,000 for bigger, full-scale renovations. These fees vary based on square footage, flat rates, or construction value. You should also plan for time, as permit approval and issuance can take approximately two weeks.
Labor
Labor is a substantial expense you must include in your budget from the start. You might need architects, engineers, drywallers, interior designers, and more. Electricians and plumbers alone will make up around 10 to 20% of your labor budget.
Surprises
Home improvement projects rarely go exactly according to the roadmap. Unforeseen issues often pop up just when things seem to be going smoothly. Whether it's carpenter ants making a meal out of your studs or dangerous knob-and-tube wiring from the 1900s found in your basement, you need to be prepared. We recommend setting aside 10 to 20% of your budget for contingencies.
Cost of living in a dysfunctional home
Don't forget the human cost. Where will you bathe if your only bathroom is stripped to the studs? How long can you afford to eat out when your kitchen is a pile of rubble?
It's not just about money. It can be unsettling to have strangers operating loud machinery in your house every day. Dust and debris will inevitably find their way into every nook and cranny. You need to consider how your daily routine might be compromised and plan accordingly.
The Facet difference
At Facet, we believe that every decision is a financial decision, including the choice to renovate your home. Our member-first approach means we don't just look at your investment portfolio; we look at your entire life. We operate on a flat-fee membership model, which allows us to provide objective, fiduciary advice without the conflict of interest that comes with asset-based fees.
We want to help you achieve self-fulfillment, and sometimes that means creating a space where you can relax and recharge. We treat your financial experience as a journey, helping you weigh the pros and cons of a renovation against your long-term goals. Whether you're planning to sell soon or stay for decades, we help you align your renovation budget with your values and your future.
