Generally, a home is the most valuable asset that people ever own. And while homeownership itself is a major achievement, taking steps to increase your home’s value could make it even more rewarding.

An upgraded home can be more than just comfortable and enjoyable to live in. It also can be a foundation for your financial well-being. A more valuable home means you have more equity — which you could borrow to pay major expenses, if qualified — and can maximize your return on investment when you’re ready to sell.

There are many projects, large and small, that homeowners could take on if they want to know what increases home value. Here’s a guide to boosting property values:


Why Increase Your House’s Value?

There are different reasons why homeowners might want to know how to increase the value of their home. Some of them are emotional, such as improving their living space. Others are financial, including maximizing how much equity they could borrow, or profit they could make when selling the home.

Here are a few common reasons why homeowners might want to increase their home’s value.

End PMI payments

If your home’s equity — the property’s market value minus what you owe on your mortgage — is less than 20% of what you paid for it, your lender likely requires you to pay for private mortgage insurance. PMI protects the lender in case you default on the loan, and the cost of it is added to your monthly mortgage payment.

Homeowners can stop paying PMI once they reach at least 20% equity in their home. If you have less than 20% equity, you can increase it by paying down your mortgage principal. Your equity also could increase if the market value of your home rises relative to what you owe.

If you do both — pay down your mortgage balance and make improvements to boost your house value — you’ll build equity from both sides of the equation.

Once you have more than 20% equity — either because you’ve paid down your mortgage balance or refinanced based on a higher market value — you can stop paying PMI, which saves you money.

You have more equity to borrow

Another advantage of building equity is that you could borrow it with a home equity loan, a home equity line of credit, or a cash-out refinance, if qualified, to pay for large expenses.

Common reasons for borrowing equity include consolidating high-interest debts; financing education expenses, such as college tuition; paying for renovations or upgrades that will further increase the home’s value; or covering major medical expenses.

The more equity you have, the more you can borrow. Having more equity also makes it easier to get approved for those loans, and to receive better terms from lenders.

Sell your home for more money

When it’s time to sell, you’ll want to do so for the highest property value you can get and make the most money possible from the sale. The amount of cash you’ll keep after closing depends on how much you sell the house for, minus what you owe in closing costs, any real estate agent commissions, and taxes, and how much you still owe the bank on your mortgage.

At the minimum, most sellers make sure their home looks clean and uncluttered when showing it to potential buyers. What stops a lot of people from doing more to boost their home’s value before selling is that they think they need to make expensive and time-consuming changes to see any benefit.

But small improvements could make a worthwhile difference.

Catherine Collins Alford, co-founder of Millennial Homeowner, a site created to help millennials become better homeowners, says relatively minor and inexpensive “mini-renovations” helped draw a better-than-expected offer when she sold her first home.

“I spent only $1,500 on bathroom updates, including paint, a new vanity, and new accessories,” says Alford, who is based in the Detroit area. “I also spent under $100 on mulch and flowers for our front yard. With these updates, our house looked amazing in photos and during showings, and we received multiple offers and ended up accepting an all-cash offer $15,000 over asking.”

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The Best Home Improvements To Increase Value

From easy and cheap to major investments of time and cash, here are a dozen home improvements that you as a homeowner can try to help increase your property value:


1. Kitchen improvements

One of the most effective ways to improve your property value is to upgrade the kitchen. This can include anything from updating appliances to replacing the flooring, counters, sinks, and cabinetry.

Kitchen upgrades typically offer the best return on any kind of home renovation. Remodeling magazine reports that kitchen renovations increase a home’s value between 54% and 72% of the amount spent on the remodel, according to 2021 data.

Given the time and cost associated with comprehensive kitchen renovations, it might not make sense to do a big overhaul if you’re looking to sell soon. But if you have more time — or if you’re just looking to build equity — kitchen remodeling offers a lot of bang for your buck.

2. Bathroom improvements

Like kitchens, attractive and functional bathrooms are appealing to potential buyers. Remodeling an existing bathroom provides a strong return on investment, as does adding one. In 2021, homeowners increased their home’s value by more than 50% of what they spent to add a bathroom, according to Remodeling magazine.

Again, it might not make sense to do a major renovation if you’re going to sell soon. But bathroom upgrades are a good way to make your home more enjoyable to live in and more valuable on the market.

3. Heating and cooling system updates

Upgrades to your heating or cooling systems can do a lot to improve your house value. In addition to being essential to your home’s overall comfort level, the cost of running heating and cooling systems plays a large role in how much you pay for utilities.

Relatively inexpensive improvements, like adding insulation, can make running these systems cheaper by as much as 20%. Major upgrades — like installing central air in a home that lacks it, or replacing a furnace — cost much more. But newer equipment is generally more energy-efficient, and can help you or the buyer save money while keeping the home comfortable.

Buyers prefer homes with upgraded heating and cooling systems, even though the upgrade might not do much to increase the sale price. If your home has no cooling system at all, adding one could increase the property’s value by as much as 10%.

4. Roofing repairs or replacement

One-third of homeowners looking to sell say that replacing their roof helped them close a deal, according to research from the National Association of Realtors.The group also found that, on average, a new roof raised the value of a home more than the cost of installation.

The average roof lasts 15 to 25 years. Even you’re not looking to sell, repairing or replacing your roof could boost your equity while protecting your home for years to come from damage-causing leaks.

5. Flooring improvements

Improving your flooring can mean replacing old carpets, refinishing hardwood floors, or fully replacing the flooring to modernize your living space. Flooring improvements are some of the most effective upgrades that help people feel happier in their homes, according to NAR’s report. It also said flooring upgrades offer a good return on investment, depending on the type of project.

6. Expanding square footage

Typically, finished square footage directly relates to your property value, with larger homes being worth more money. The larger your home, the more space you have to store things, and the greater flexibility you have in terms of how you use your home.

If you’re staying in your home, adding space is generally cheaper than moving. And if you’re selling, you can make your home more attractive to buyers by adding a room or finishing the basement, attic, or garage so it may be used as a home office, gym, or guest room.

7. Fresh paint

Painting is a relatively low-cost way of making your house seem maintained while giving it a fresh look. This is one of the most affordable and easiest upgrades, and it’s something most homeowners can do themselves. The effect is immediate, whether you’re painting one room or completely repainting the interior and exterior of your home.

Choosing the right color also plays a role in your property’s value. For example, recent research found that painting your kitchen in light blue can boost offer prices by 1.6%, while painting your kitchen dark red instead of white reduces offers by an average of nearly $1,500.

8. Landscape refinements

A classic piece of advice for improving your house value is to increase its curb appeal. After all, the front of your home is the first thing that people see when they drive past or walk up the front path.

If you want to keep it simple, mowing the lawn and planting a few flowers can sweeten the mood for your home. More-intense renovations can mean adding planters, shrubs, or trees, or going all-in to make your backyard a great party space.

9. Energy-efficiency upgrades

The average American household spent $117.46 a month on electricity in 2020. In warm climates, costs can be higher due to cooling needs; cold climates require homeowners to pay winter heating bills.

Improving your home’s energy efficiency could boost its value by lowering the cost of keeping the climate controlled. Ways to improve your home’s energy efficiency include installing new windows, replacing an old water heater, and upgrading dated appliances.

Additionally, you could consider bigger upgrades, such as adding solar panels. Homes with solar panels can sell for as much as $15,000 more than similar homes without solar, according to Berkeley Lab’s Electricity Markets and Policy department.

Less expensive updates, such as adding insulation to your attic, also can make your home more energy-efficient and boost your property value.

10. Updating technology

Nearly two-thirds of homebuyers are willing to pay more for a home with smart technology, according to a 2020 survey by Z-Wave Alliance.This includes smart thermostats, smoke detectors, locks, and speakers. Some smart updates can cost as little as $100, making them a potentially inexpensive and worthwhile investment.

11. Air quality improvements

Air quality is usually invisible, but it’s still important in keeping you and your family healthy. Air quality also plays a role in house values, with a Harvard Environmental Economics Program study finding that house values increase as pollution levels in an area decrease.

Homeowners are unable to change outdoor air quality, but they can take steps to improve the quality of the air inside their homes. The Environmental Protection Agency recommends removing pollution sources such as gas stoves, increasing ventilation by adding windows, using heating and cooling systems that bring air into the home from outside, and investing in air filters.

12. Cleaning and decluttering

If you’re trying to sell your home, you want people to feel welcome and excited about the living space when they come for a showing. A report from NAR found that homes that were cleaned and staged before showings sold for an average of 5% or more compared to similar homes that were not staged.

Again, cleaning is a simple step that most homeowners can do on their own to make the space more enjoyable and inviting, even if they’re not ready to sell.

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The Bottom Line on Increasing House Value

In the end, what increases home values? It’s anything that makes your home look better, operate more efficiently, and feel more enjoyable and comfortable to live in. Remember, when you’re thinking about how to increase property value, it’s almost always good to enhance the experience of living in the home — both for you as long as you own it, and for potential buyers when you’re ready to sell.