If you’ve been thinking about home improvements, this is a great time of year to explore your options, obtain cost estimates and decide how to finance the project. To kick off your planning, consider the projects below. Each is focused on reducing your energy bills or adding value to your property — while helping you and your family enjoy your home even more.
Projects to Improve Energy Efficiency
The U.S. Department of Energy estimates that an average home could see a 25% reduction in total utility costs by implementing energy efficiency measures.1 An energy audit can help you identify improvements that will make the biggest impact on your budget. (You can learn more about energy audits at Energy.gov.) The projects below address some typical areas of opportunity. Many may even qualify for tax breaks under the Inflation Reduction Act of 2022 (restrictions apply, so talk with your tax advisor for details).
- Replace older, single-pane windows with low-E double-pane models to reduce your energy bill by an average of 12%.2 Adding energy-efficient storm windows could potentially reduce heating and cooling costs from 10%-30%.4
- Update major appliances. On average 43% of a home’s utility expenses are for heating and cooling, 12% for heating water and 15% accounted for by other major appliances.5 Newer energy-efficient appliances may help reduce those expenses by consuming less energy and having lower operating costs.
- Add insulation. Ninety percent of single-family homes in the U.S. don’t have adequate insulation. Making improvements may save as much as 15% on heating and cooling costs.6
- Add solar panels. While this may be expensive and many factors affect how long it will take to recoup your investment, sources say the average payback period is from 8 to 12 years.7
Projects to Enhance Home Value
Home improvements typically increase the value of your property, but that increase is usually less than the project’s cost. The projects below have the potential to recoup 50% to 90% of your investment when it comes time to sell your home, based on Remodeling magazine’s 2022 Cost vs. Value Report.3
The report compares a project’s cost to its potential to increase your home’s resale value. For instance, a $10,000 project that increases your home’s value by $7,000 would recoup 70% of your investment, which is shown below as ROI.
- Remodel the kitchen. This project can range from 52% ROI for a major, upscale remodel to 71% for a smaller update.
- Remodel a bathroom. For this popular project, you could recoup from 53% of your investment (for an upscale update that expands the room’s square footage) to nearly 59% for a midrange improvement.
- Enhance outdoor space. A landscaping upgrade that includes a flagstone walkway, stone planters, mulch, flowering shrubs and a large tree can increase property value as much as 83% relative to the cost of the improvements.8 Even individual improvements — such as adding landscape lighting, a fire pit, water feature, deck or patio can improve your home’s value while helping you enjoy your yard more.
- Add a stone veneer. Enhancing your home’s street-facing exterior can reap up to a 91% ROI.
- Add a primary bedroom suite. While there are many options for expanding living space, the Remodeling survey findings are based on building a new room over a crawlspace, yielding a 46% ROI for an upscale add-on and 53% for a midrange addition.
If you plan to use professionals for the home improvement projects you want to take on in 2023, talk to friends and family for referrals. Examine contractor websites, read online reviews and check them out with the Better Business Bureau. And always try to get at least two estimates.
When you consider how to finance your project, take into account the project cost and how much of your savings you’re willing to spend. If you’ll need financing, options may include a credit card for smaller jobs, tapping into your home equity for bigger projects or an unsecured personal loan if your available equity is limited.
1 “How much does energy efficiency cost?” Energysage.com, updated July 13, 2020, https://www.energysage.com/energy-efficiency/why-conserve-energy/cost-of-ee, accessed Nov. 22, 2022
2 “Energy Star Home Upgrade,” EnergyStar.gov, https://www.energystar.gov/products/energy_star_home_upgrade, accessed Dec. 14, 2022
3 “Remodeling 2022 Cost vs. Value Report,” www.costvsvalue.com, ©2022 Zonda Media, a Delaware Corporation. Complete data from the Remodeling 2022 Cost vs. Value Report can be downloaded free at www.costvsvalue.com
4 “Energy Saver: Storm Windows,” U.S. Department of Energy, https://www.energy.gov/energysaver/storm-windows, accessed Dec. 14, 2022
5 “Why Energy Efficiency Upgrades,” U.S. Department of Energy, https://www.energy.gov/eere/why-energy-efficiency-upgrades, accessed Nov. 22, 2022
6 “How much could you save by insulating your home” Erin Scottberg, This Old House, https://www.thisoldhouse.com/insulation/21097080/home-insulation-helps-reduce-energy-bills, accessed Nov. 22, 2022
7 “Solar Panel Payback Period (How long to recoup costs?),” Josh Hurst, reviewed by Melissa Smith, Ecowatch.com, posted Dec. 5, 2021, https://www.ecowatch.com/solar/solar-panel-payback, accessed Dec. 14, 2022
8 “12 Outdoor Upgrades That Make Your Home More Valuable,” Glenda Taylor, Bobvila.com, https://www.bobvila.com/slideshow/12-outdoor-upgrades-that-make-your-home-more-valuable-51905, accessed Dec. 14, 2022