Creating a backyard getaway is at the top of the wish list for many homeowners. And with good reason. Who wouldn’t want their very own backyard oasis to quietly relax in during the day and entertain guests at night? Installing a pergola is part of creating that perfect backyard getaway. But what is a pergola’s return on investment? Will a pergola add value to my home?
Pergolas are beautiful additions to a home because it effectively gives you more “living space” outdoors. It’ similar to adding a patio or gazebo to serve as an outdoor living room. But is it worth the investment?
While a pergola installation is one of the less expensive hardscape additions, it’s still important to know what kind of value it will add to your home, if any. This could sway your decision one way or the other. Click here for an in-depth guide to the average cost of a pergola.
Here are some ideas to help you determine the return on investment (ROI) on this type of home improvement project.
Pergola return on investment: types and costs
There are several types of pergolas that range in design and material type. The installation and maintenance costs vary for each. You can get a prefab pergola or hire someone to create and build a custom design.
The biggest factor affecting the cost of a pergola is its size and type of material used.”
The route you take will make a difference in the value that your pergola adds to your home.
Let’s take a look at the breakdown of the costs.
- Materials: $3,000
- Labor: $500
Teak or Ipe (wood)
- Materials: $5,000
- Labor: $750-$1,000
Fiberglass or aluminum kit
- Materials: $1,000-$5,000+ (depending on size and design options). Labor costs vary.
Wood is the most popular and aesthetically pleasing option, but it also requires more maintenance over time. You’ll possibly have to reseal it, repaint it, or repair hardware used to fasten the structure together.
Fiberglass and aluminum pergolas, on the other hand, are strong and easy to maintain.
If you’re into DIY projects and you’re up to the task, you can also opt to install your pergola yourself. A 10-by-10 kit will cost you around $2,000, and a 12-by-12 kit will be around $2,500.
While a custom built pergola will cost around $3,500, you can lower the cost to around $3,000 if you do it yourself.
Pergola return on investment: Geography
Where you live will have a big impact on the installation cost as well as the ROI of your pergola. In Remodeling Magazine’s 2017 Key Trend Report, we see that all types of home improvements (including outdoor ones) vary by region and even state, in terms of cost versus value.
Outdoor home improvements tend to get more use in warmer climates, and therefore add more value to those homes.”
Outdoor home improvements tend to get more use in warmer climates, and therefore add more value to those homes. For example, an outdoor home addition will likely add more value to a home in California than it would in Minnesota.
We looked at Remodeling Magazine’s data for both states. In Minnesota, decks yield a 46.3% ROI while patios yield a 61.9% ROI. In the Los Angeles area, you can expect a 53.8% return on a patio and 68.5% return on a deck installation.
Also, in states with a “hotter” housing market, home improvements are just the icing on the cake. In other words, you’ll recoup the cost of almost any addition on a house located in a booming market. That includes outdoor home improvements, as well.
For example, according to Remodeling Magazine, Orlando’s median home prices were up 14% from the year prior, while Houston’s were only up 6.3%. This could explain why the resale value of the same exact backyard patio was rated 27% higher in Orlando than Houston.
ROI for similar outdoor amenities
Look at similar outdoor additions and upgrades, if you’re hard-pressed to get a true ROI from calculators and appraisers for your particular pergola installation. As you now know, calculating the ROI on home additions is hardly an exact science.
In Remodeling Magazine’s 2017 Key Trend Report, the national average cost to build a flagstone patio, attached to the back of a home with a pergola, came in at $51,000. The actual value it added to the home was around $28,000, or about a 54.9% payback.
Keep in mind, this is a national average. There are markets where the return could be much higher or lower.
Contractors with a pulse on renovation projects like this offer up a more optimistic valuation for investing in outdoor living spaces. Paul Lada, Owner of Platinum Kitchen Designs says, “A good rule of thumb is that, for every $1,000 spent (up to about $10,000) outside in improvements, you can expect an ROI of $3,000.”
Though a pergola was only part of the above example, you can use this as a baseline to see how hardscape additions can increase the value of your home.
A pergola is certainly a nice addition to someone’s backyard. But it won’t give you the highest ROI, compared to other hardscape additions like a patio or outdoor kitchen.
Build a pergola for you to enjoy while you live there. Don’t build it with the intention of getting your money back when you sell the house.”
Chris Heider, DIY expert of Handy Dad, says, “Build a pergola for you to enjoy while you live there. Don’t build it with the intention of getting your money back when you sell the house.”
At the end of the day, it’s best to consult with local professionals to help you pin down the ROI for a pergola installation based on your market.
Financing your pergola
If you’re ready to install a pergola in your yard, the next step is figuring out the how to finance it. Getting a personal loan through online lenders like Avant, Prosper, and LightStream is one of the best routes to take. Looking for a reliable contractor? Homeadvisor ProFinder makes it easy to find one in your area.
Get pre-approved offers from leading lenders with SuperMoney’s loan offer engine. Using this tool will not affect your credit score.
You can then head over to our personal loans review page to compare the rates and terms of each lender. You’re one step closer to creating the backyard getaway you’ve always wanted.