Owning a home during the coronavirus pandemic years was better for Black Americans growing their wealth than for any other ethnic group, a new report from Zillow found.
The value of Black-owned homes grew 42.5% between February 2020 and February 2023, the study found. That compares to 38.2 growth among all home values and 37.8% appreciation for white home values. Black Americans gained roughly $84,000 in home equity during those years, Zillow said.
“These gains are extremely important in terms of increasing wealth among the Black community, as homeowners of color are more likely to have the bulk of their household wealth tied up in their homes,” Nicole Bachaud, Zillow senior economist, said in the report.
A scorching-hot housing market last year helped catapult home values in Black neighborhoods, Zillow said. Home values overall skyrocketed in the past two years after pent up demand from the pandemic and rising rent prices pushed many Americans into shopping for a house. Home prices climbed to record highs in 2022 and mortgage rates grew equally as fast.
Some of the sharpest home appreciation gains for Black Americans took place in Midwestern cities like Milwaukee, Cleveland, Chicago, Kansas City and Detroit, the report found.
The overall market can help with appreciation, but there are also improvements projects someone can complete to grow a home’s value, real estate experts said. Here are the top five improvements that offer the most return on investment.
ADDING A DECK
Not every home has enough land in the backyard for a deck, but experts say adding one if possible increases a home value by thousands of dollars. Adding a deck costs roughly $19,248, according to a separate Zillow report.
REPLACE THE SIDING
Siding plays a major role in how much a home is worth, experts said. A new layer of siding makes a home look fresh and more durable, said Ashley Walker, a real estate agent in Detroit. The move typically adds another $12,000 onto a home’s value, she said.
“It’s all about how it looks to the consumer,” she said. “People are willing to spend more on houses that are appealing to the eye, which increases the value.”
New siding on a home typically costs $18,662, according to Zillow.
REMODEL THE KITCHEN
Upgrading a kitchen makes the entire home more attractive to buyers, which then raises a home value, said Enisha Brooks, a realtor in Michigan.
“The kitchen nowadays can be seen as a family gathering space, especially in most open floor plan homes,” she said, adding that today’s kitchens “require more space, more seating, televisions, a smart shopping list” and more.
A kitchen remodel is about $28,279, Zillow said.
REPLACE THE WINDOWS
Updating windows improves the curb appeal of a home and can almost make a house look new, Walker said.
“New windows also create heat efficiency and add natural light to a home, which ultimately will increase the number of people that view the home and want to take action,” she said. “That one update increases the desire for the home, which increases the value of the home.”
The average window replacement is $20,482, Zillow said.
RENOVATE THE BATHROOM
Remodeling a bathroom is worthwhile because potential buyers see that as one less repair job they have to handle before moving in, Brooks said.
“Both the bathroom and the kitchen are spaces that can be the most expensive to update and can also take more time, depending on how drastic the update is and any unforeseen problems that can occur during a renovation,” she said.
The typical bathroom remodel costs $10,788, according to Bankrate.
