Your Garage is Worth At Least $55,000
Burgeoning Possibilities to Add Valuable Space to Your Home
The global energy revolution is knocking at your door. With improving economics for home energy upgrades, plummeting costs for rooftop solar systems, and even the potential for defection from the electric grid, homeowners face a bevy of new options to control their own energy supply and demand—as well as increase home values and tap into new revenue streams. And new developments are turning a part of the typical home into another major source of value, one that many Americans essentially waste due to our dependence on personal vehicles: the garage.
Personally Owned Vehicles Are On the Way Out
In the United States, we have approximately one car for every adult, or roughly 250 million personally owned vehicles (POVs). Although these vehicles are our primary mode of transportation (for now), they sit parked 95 percent of the time. We build giant rooms in our homes to accommodate $32,000 machines that are essentially paperweights for 23 hours a day. But, like the global energy revolution, a mobility revolution is brewing that could completely disrupt transportation and send POVs the way of horse-drawn carriages.
There’s a significant market and behavioral shift in the works. The Millennial generation shows less attachment to POVs and greater affinity for residing in urban/near-urban areas with easy access to public transit. They also increasingly use alternative mobility services like Uber, car sharing, cycling, public transit, and telecommuting. Companies like Google are deploying electric, autonomous vehicles in urban settings that will revolutionize personal mobility. The confluence of these forces will lead to electric, autonomous mobility as a service, which has the potential to break our addiction to POVs and save the average U.S. family over $5,000 per year, save tens of thousands of lives, reduce CO2 emissions by one billion tons per year, and improve the quality and efficiency of our personal mobility.
Garages Will be Left Vacant
These market developments—which inspired RMI’s collaboration with Austin, TX and Denver, CO to demonstrate and accelerate a transformational, low-carbon future for mobility—suggest the arrival of a mobility future where families own just one vehicle or perhaps none at all. Of course, this will take time, and we do not know exactly how it will unfold. In the meantime, it is worthwhile—or at least fun—to consider the wide-reaching implications of this potential market transformation. We asked ourselves, “As POVs become less prevalent, what happens to our home’s garages?” It turns out this is a question others are also raising.
In addition to starting a rock band or computer company, there are a number of possible alternate uses for your garage that would provide real economic benefits today. In fact, garages present a noteworthy, untapped income-generating asset for the ever-expanding sharing economy that continues to unveil new sources of value. For certain homeowners who do not have cars or who are considering getting rid of a car, it is worth pondering, “Am I wasting valuable real estate right in my own home?”
A Rentable Apartment, Leasable Office Space, Hotel Room, Gym, or Simply More Room—The Choice is Yours
The emergence of the sharing economy and associated platforms is enabling new sources of income and cost savings. By repurposing your garage as an additional room in your family’s home, flexible and low-cost office space for startups, a “hotel room” on AirBnB, a rentable low-cost tiny home, a guesthouse for aging parents serving as an alternative for an expensive retirement home, or even a CrossFit gym promoting greater health across your neighborhood, you can convert a space that is currently being little used (other than for storage) into something that delivers a new source of family income and/or savings.
It might be that what you could use most is additional living space, whether it’s a sunroom, rec room, or even an art studio. National housing data also suggests this would be a sound investment. The value of the average garage’s 570 ft2 of added living space—using the 2014 national average for single-family home sales of about $97/ft2— is approximately $55,000 per home.
A garage-repurposing retrofit would likely deliver significant net-positive value based on added property value alone, given that the average reported cost for a garage retrofit is $10,000 and the high end of the spectrum is in the $30,000s. Prioritizing energy performance can further enhance the value. Also, a coordinated move where you sell a car (saving $5,000 per year), and use the proceeds to finance the retrofit would reduce costs still further.
An Opportunity for Valuable Energy-Performance Improvements
RMI’s Residential Energy+ initiative is collaborating with industry partners to develop consumer-centric market solutions unlocking investments in home energy upgrades nationwide. In order to empower homeowners to make these investments, we’re co-developing solutions that take advantage of key intervention points like a garage repurposing retrofit. At these points an energy upgrade would only require an incremental addition to the cost and effort already being spent on the work underway, while increasing the overall property value of a home.
A garage-repurposing retrofit should trigger an energy upgrade that complements the planned work on the garage. By emphasizing measures like better insulation and efficient windows that reduce the energy needs of the space—measures that RMI’s Innovation Center leveraged to reach net-zero energy status—you can achieve higher levels of thermal comfort without having to invest in a new heating or cooling system. Energy performance improvements like these help keep upfront costs low and ensure your property demands less energy per square foot—reducing its energy use intensity and associated utility costs.
Popular technologies like smart thermostats and LED lights—plus innovative business models like solar leases and bundled home energy upgrades—can also make your garage-turned apartment, hotel room, or office more desirable to those in the market for comfortable and affordable real estate.
Even if you’re not repurposing your garage and intend to keep it as a place to park your car, it makes sense to invest in better insulation to seal your garage. This will improve home energy performance by reducing unwanted heat loss/gain and improve indoor air quality by preventing the harmful fumes emitted by your car from entering your home. Of course, the energy upgrade need not be confined to your garage. A whole home energy upgrade would deliver you a more comfortable home that is also more valuable.
To Repurpose, or Not to Repurpose
Now for a reality check: most buyers in the property market today are still likely to want a garage, particularly in the suburbs. Those that invest now may have to wait some time before the property market attributes equity value to repurposed garages. For those hoping to sell their home in the next few years, the repurposed garage may, in fact, make a home harder to sell in many markets. However, homeowners playing the long game would likely take a first-mover advantage by investing today in a repurposed garage—with the expectation that a significant reduction in POVs will lead to increased property values down the road as markets begin to reflect the value of a repurposed garage.
Given the status of mobility options in various markets, the first step may be to make the switch from two cars to one. In this case, the logical choice may be to convert your two-car garage into a one-car garage plus repurposed living space that you can either use or lease out.
Those playing both the short and long game stand to benefit today from the new income streams and cost savings that both a reduced use of POVs and a repurposed (and energy-efficient) garage can deliver. Exploring these valuable opportunities may also reveal parallel ones that tap the nationwide market potential for repurposed or multi-use commercial garages in urban centers—the heart of the mobility revolution.
Photo courtesy of Wang, Creative Commons license (CC BY-NC-ND 2.0).