The housing market was surprisingly strong in 2020. Even as the COVID-19 pandemic reduced the income of millions of people, sales of new and existing homes rose sharply compared to 2019 as many buyers sought spacious suburban properties for work-from-home lifestyles.
Per the National Association of REALTORS, existing-home sales in September 2020 climbed 19% year-over-year, while the median price jumped 14%. Total U.S. inventory tumbled to only 1.47 million units at the end of that month.
So can we expect similar strength in 2021?
Yes and no. Zillow expects 2021 sales to taper off from 2020's high, but still be above pre-pandemic levels. If you're looking to sell in spring 2021, you may have the advantage of a seller's market with high demand and low supply. Making upgrades to your home before selling may improve your prospects further, so let's explore some of the options with the highest ROI.
Upgrade No. 1: Bathroom Remodeling
According to HGTV, this upgrade more than pays for itself, averaging a 102% return at resale - higher than any other single improvement. Despite costing over $10,000 to replace all fixtures and tiles, you can expect nearly an $11,000 increase in resale value. Even some simple caulking can make a tub look like new and boost a home's overall appeal.
Upgrade No. 2: Landscaping
The first thing a prospective buyer will see is your home's exterior - so why not improve it to avoid immediately giving them the wrong impression? Make sure to remove any dead plants and to refresh the lawn if applicable. If you're on a budget, resodding the grass yourself to cover any dead spots and depressions is a very cost-effective option.
Upgrade No. 3: Painting
A Zillow homeowner survey found that this was the most common home improvement before selling, with 45% of respondents painting the interior and/or exterior of their homes. Neutral colors like gray are usually safe choices, although it may be useful to get professional recommendations. The paintwork also lends itself to DIY more so than most other improvements.
Upgrade No. 4: Flooring
One in four respondents to the Zillow survey reported upgrading their flooring before selling. Wood and faux-wood are generally preferable to carpet. If wood flooring is already in place, then finishing, staining or otherwise treating it can make it look like new again. This improvement typically requires professional assistance, although some faux-wood flooring has click-together joints for easy self-installation.
These are some of the main improvements to make. No matter which ones you choose, you'll need a reliable way to finance potentially tens of thousands of dollars in related expenses. Fortunately, there are some good options for doing so, including:
- Cash-out refinancing: This approach replaces your existing mortgage with a loan of greater value, with the difference going to you as cash, which you can spend on remodelling your home.
- Home equity line of credit: A revolving credit line similar to a credit card. A HELOC lets you borrow money as needed through credit lines secured by your home's equity. HELOC. It may have variable interest rates, but you only pay interest on funds you use.
- Home equity loan: A loan collateralized by your home, this option is akin to a second mortgage. It comes as a lump sum, at a fixed interest rate for