What to Expect: How Much Will Home Renovations Cost in 2023?
Updated: May 19
Experts are finding home renovation costs to be somewhat hard to predict in 2023. Rising interest rates typically keep potential buyers out of the housing market.
Rising inflation and loan interest rates in a slowing real estate market may mean that the remodeling industry could get a boost — or not. Equity loans, though also subject to increasing interest rates, are somewhat more appealing to many homeowners due to the lower overall cost versus refinancing or purchasing a new home. However, fears of a recession are still looming large, which could instill spending fears even with current home prices falling.
We're in the midst of a turbulent economy and it seems that nobody is sure of what to expect. Uncertainty in the marketplace is causing some experts to predict that the number of home renovation projects will increase, but they say that the remodels themselves may be smaller during such turbulent times with homeowners paying close attention to cost.
Renovation Trends in 2023
Renovation trends are likely to focus on:
Interior design changes
Updating spaces instead of rebuilding them
Making structural changes
Getting creative with the home's current footprint instead of building additions
Factors That Affect Renovation Costs
Supply chain issues and labor shortages are still at play throughout numerous industries. Lumber prices are expected to stabilize somewhat in 2023, but they won't be returning to pre-pandemic levels any time soon and will likely fluctuate with demand.
The cost of building materials as a whole is still slowly rising, but not dramatically.
The uncertainties in the economy mean it's anyone's guess as to how renovation costs will be affected across the various building materials.
All things considered, it appears that remodeling material costs are higher than prepandemic costs but overall won't increase drastically. This is good news if you're trying to plan a budget, even if it's not great news for saving money.
Budgeting for Your 2023 Renovation
How do you budget for your 2023 home renovation? Your primary consideration should be whether or not the project is worth it based on its return on investment (or ROI). The national average for home remodeling is $49,000, with most remodels costing between $18,000 and $80,000. However, the return may be far less than what you spend, so it's important to choose your projects wisely in this economic environment unless you plan on staying in your home for the foreseeable future.
The trend for 2023, however, leans toward more minor renovations, such as individual room remodeling or updating luxury spaces such as garages, kitchens, and bathrooms. We'll explore those estimated costs. However your remodeling budget shakes out, you should expect to spend more on the same home improvement projects as you would have before the pandemic.
Renovation Costs by Project Size
Typically, the smaller your renovation project, the more it will cost per square foot. A whole-house remodel will cost between $15 and $60 per square foot, while a single kitchen or bath remodel can have a price tag of $100 to $250 per square foot. Putting an addition on your home runs between $90 and $200 per square foot.
Renovation Costs by Project Type
The expected trend in 2023 is toward smaller home remodeling projects. Despite higher per-square-foot pricing than whole-house renovations, smaller projects cost less overall, which could make them more appealing in an uncertain financial environment.
Individual Project Costs
Expect average prices to be around the following dollar amounts for upgrading individual home features.
HVAC upgrades: $8,000
Plumbing upgrades: $4,000
Window replacement: $2,000
Flooring Upgrades: $8,000
Bathroom Remodeling Costs
Bathrooms are one of the most popular remodeling goals. The average bathroom remodel cost is around $11,000 but can go as low as $2,500 or upward of $40,000 depending on the scope of the project and your choice of fixtures and amenities.
Here's how the average material prices break down for each category. Expect an additional average cost of around $3,800 for labor.
Plumbing work: $2,000
Fixtures and vanity: $5,000
Cabinets & Storage: $1500
Kitchen Remodeling Costs
Although remodeling a kitchen is often a costly undertaking, the scope of the project and the amenities you choose will have the most significant impact on your renovation budget. Keep in mind that cabinetry is typically the most costly part of a kitchen renovation. The cost of labor and new appliances are also significant. Here are the average costs to expect for a typical $30,000 kitchen remodel:
Cabinets and countertops: $12,000
Plumbing and lighting: $2,000
Drywall, doors, windows, and painting: $2,000
Cost to Build an Addition
Building an addition onto your home is a major renovation even at the smallest scale. The costs vary widely depending on what type of addition you're installing and its square footage. Regardless of what goes into the space, the added cost of digging and pouring a new foundation area raises the project price by about $4.25 to $6.25 per square foot. A kitchen addition will have extra costs associated with its new or extended plumbing. The same is true of a bathroom addition but likely to a lesser extent.
Adding a living room space or bedroom is less expensive than a kitchen addition. However, additional HVAC requirements should be considered in every additional installation situation regarding whether or not your current system can handle the extra load or how much it will cost to upgrade to a larger system.
The average cost of putting an addition on a home is around $46,000. But the typical range is vast, starting at about $5,000 and going up to and beyond $150,000.
Exterior Remodeling Cost
Extending your living space to the outdoors is still popular. You can add new life to your backyard and spend time outdoors without the cost of an interior remodel or addition. Consider installing a backyard kitchen, deck, patio, or pergola for far less than renovating your home.
Although high-end outdoor kitchens can set you back over $50,000, a basic build with all the necessities for cooking and entertaining can cost as little as $2,000 to $10,000 depending on your design and materials.
Adding a basic deck design built of pressure-treated wood to your outdoor space can be done for between $15 and $20 per square foot, while a simple patio runs between $8 and $20 per square foot. A DIY pergola kit starts at around $1,300, but a custom professional installation could set you back $10,000.
If all your home exterior needs is a new look provided by a paint job, expect an average price of about $5,000 to have the work done (for a 2,000-square-foot single-story house).
DIY vs. Contractor Pricing
How much you decide to budget for your home renovation in 2023 may come down to how much elbow grease you're willing to extend. Labor shortages continue to cause delays and price increases for contractors. Unfortunately, those costs must come from somebody's wallet—namely, yours. Labor cost percentage on a typical kitchen remodel runs between 30 and 35 percent, while contractor markup on already-rising material prices can add another 10 percent.
If you're willing to trade your time for some cost savings, DIY projects might be your answer for saving money or extending your budget to include a few luxury items in your plan.
Keep in mind that there's a price to pay for doing it yourself over hiring a general contractor. You'll be responsible for obtaining permits and being home for the inspectors when the time comes. Also, you'll likely be giving up several weekends performing potentially demanding labor tasks. Additionally, you'll need to learn safe work practices if you're not already an avid DIYer. Buying a Bagster or renting a dumpster is a must on your DIY checklist.
In some cases, hiring a contractor who is willing to share the workload with you might be to your financial advantage. Perhaps you could take on some of the less crucial renovation tasks, like cleanup, gathering materials, or doing your own demolition work, and hire an electrician and plumber to help with more specialized projects.