It goes to the home's value (aka you'd get more when you sell it). I kind of think of it like brick. Brick has a much longer maintenance cycle than vinyl or wood siding.
Part of our bubble is that at times it's been "more than 100% efficient", so to speak.
Witness dozens of TV shows, "You guys had $50K for your reno budget. Your original value was $250K, and you spent $50K and now your house is worth $350K!"
Your example doesn't show excessive value capture for the upgrades in the home. Rather, for the extra 50k in bank loaned money, the buyer is choosing not to engage in renovation for reasons typically related to: inconvenience, time restrictions, lack of vision, etc.
You'll no doubt recoup some of your value, but not all of it.