Many property owners who anticipate selling their homes in the near future face uncertainty about whether it makes financial sense to proceed with updating or remodeling projects before listing their homes for sale. One decision frequently considered is whether remodeling a bathroom will deliver a good return on investment (ROI) when selling the home.
Common home renovations made include kitchens (27%), guest bathrooms (25%), primary bathrooms (23%), and living rooms (19%). HomeLight, a real estate tech company, reports that approximately 92% of real estate agents feel that their prospective homebuyers find properties with recently updated or renovated bathrooms and kitchens appealing. Further, Bankrate found that 25% of realtors encourage sellers to upgrade their bathrooms before selling their homes.
2024 Home Sales Forecast
Home sales throughout the U.S. have declined since mortgage interest rates rose dramatically in 2022 as the Federal Reserve sought to slow record-high inflation by heightening rates. However, many market analysts, including the American Institute for Economic Research (AIER), are optimistic that rates will decline through the end of 2024 and increase home sales activity.
Calculating ROI on Home Renovation Projects
In terms of home renovations or remodeling, the return on investment (ROI) is a metric that estimates the amount of return or potential profitability of making a home improvement, which you can calculate:
ROI = Net Profit / Cost of Investment x 100%
OR
ROI = Final Value of Investment – Initial Value of Investment / Cost of Investment x 100%
Usually expressed as a percentage, ROI may help homeowners compare the viability of renovating a bathroom vs. a kitchen or another area of the home.
Assessing ROI on Small Bathroom Remodeling Projects
Estimates suggest that bathroom remodeling projects generally have a 74% ROI, making them among the projects that create the highest returns. Data from CNBC showed that a “mid-range” bathroom remodeling project had an average cost of $25,251, resulting in an ROI of $18,613.
ROI Assessment: Small to Mid-Sized Bathrooms
Based on the materials selected and labor costs, smaller bathroom remodeling projects range in cost from $70 to $250 per square foot.
Smart Tip: Those seeking to sell their home should make sure their bathroom plumbing is functional and up to date. In most cases, a professional property inspection is conducted, with the findings scrutinized by the prospective homebuyers. A report from Forbes indicates that plumbing-related concerns are among those that most discourage potential buyers and motivate them to move on elsewhere with their home search.
Bathroom Sizes/Types
Bathrooms are commonly categorized according to their general size:
- Half-Bath: Often having dimensions of 4 x 4 or 4 x 5 feet, half-baths measure up to 20 square feet and typically contain only a sink and toilet.
- Three-Quarter Bath: Ranging in size from 20 to 35 square feet, three-quarter baths typically contain a sink, toilet, and shower.
- Full Bath: A standard or full bath may range in size from 35 to 50 square feet and contain a sink, toilet, bathtub, or shower.
- Master or Primary Bath: With up to 100 square feet of space, master bathrooms are usually accessible only from within the master bedroom. They are also more likely to contain extra amenities such as dual sinks, linen closets or cabinets, and vanity lighting.
Top 3 Bathroom Renovations or Upgrades for ROI
Three bathroom improvements that will likely deliver a good ROI are vanities, floors, and tubs or showers.
Vanity
Adding a vanity or replacing an older, outdated one can dramatically impact the space. Vanities generally include countertops, sinks, faucets, and shelf or cabinet space. Potential homebuyers will likely assess the vanity’s condition, height, appearance of the countertop, and more. Based on the size limitations of a half-bathroom, your options are usually limited to single-sink units measuring less than 36” wide.
The cost of a vanity is influenced by the materials you choose. Three of the most popular countertop materials are laminate, quartz, and marble. Expect to pay more than $50 per square foot for higher-end marble, quartz, or soapstone tops.
Flooring
Are you looking for some half-bathroom design inspiration? A new floor also can transform bathroom space. With only up to 20 feet of floor space to cover, replacing the flooring in a half-bathroom can also be quite affordable. Flooring materials such as porcelain, vinyl, and ceramic tiles effectively repel moisture, and many closely resemble the appearance of wood or stone.
Tub/Shower
Although not applicable to a half-bathroom, an updated shower can significantly improve the appearance of a three-quarter bathroom, and a new tub and shower can do the same in a full bathroom. Keep in mind that while most inexpensive options have a nice initial appearance, they are composed of materials that will not last or look good with prolonged daily use.
Addressing Visible Wear and Choosing Quality Bathroom Furnishings
Realtor.com highlighted the importance of addressing obvious “wear-and-tear” problems. For example, a potential home buyer will recognize clear evidence of poor maintenance in the bath, such as cracked tile, mold, and water damage.
Additionally, this report warned against choosing value-priced bathroom vanities from big-box stores, explaining that many of these products have poor-quality laminate that quickly wears out.
Local Housing Market Standards and Expectations
Florida’s largest trade group, Florida Realtors, encourages soon-to-be home sellers who are considering renovations to assess their local market. For example, in a seller’s market with few available homes, renovations are often unnecessary. The organization cautions homeowners who are considering “major” renovation projects, which are much less likely to deliver much ROI.
Current Bathroom Remodeling Trends
For 2024, one of the current trends in bathroom remodeling includes choosing solid surface countertop materials that resemble granite, marble, or other more costly options. “Statement” showers are popular with glass walls and doors and oversized, luxury showerheads. As with many interior areas, choosing a minimalist interior design can help to create a spa-inspired atmosphere, which feels neat and polished.
Best Budget-Friendly Bathroom Updates
One economical way to improve a smaller bathroom is to add a stylish mirror. The right mirror can make the space appear larger, and mirrors are quick and easy to install. Another thrifty upgrade is lighting. Ambient lighting provides overall brightness. Accent lighting highlights certain room features and may create a mood. Task lighting in small bathrooms will typically illuminate the sink area.
Bathroom Remodeling Decisions Before Selling Your Home
Property owners preparing to sell their homes often contemplate committing financial resources toward renovations. More specifically, these decisions center on whether making certain improvements will eventually provide an ROI when the home sells. Most analysis shows that major renovations are unlikely to result in a solid ROI.
Among potential homebuyers, smaller guest bathrooms are likely to influence their overall perception of the home only to a certain extent.
Sellers should ensure the bathroom space is clean, compliant with current codes, and functional. However, updates and improvements such as those involving vanities, mirrors, floors, and lighting represent affordable ways of significantly making the space more appealing.
