Renovate or Buy New: 5 Questions to Help You Decide
Every homeowner wants things in a home that their current home does not offer. The question is, do you transform what you’ve got or find something new to meet your changing needs.
“When it comes to remodeling or selling your home, the decision needs to extend beyond finances,” explains Beverly Orloski, a PeoplesBank Home Equity Loan Specialist. “It is imperative homeowners take into account a variety of factors.”
Carefully weighing these five areas can help homeowners make the best decision for themselves and their families.
#1 Your House vs. Your Neighborhood
There is an adage that says you can always fix a house but you can't fix a neighborhood. Finances aside, the things you can’t change about your current home should dictate whether you move or improve.
- School district
- Traffic on your street
- Size and layout of yard
- Commute time
- Access to markets and malls
- Neighborhood quality of life
In the end, your house isn’t just your largest investment – it’s the place you live. If you love your spot, upgrading makes sense. But if a different location would be an improvement in its own right, trading up could be the way to go.
#2 Buyer’s vs. Seller’s Market
If you’re contemplating moving, you’ll likely need to sell your current house and should consider the local real estate market. If it’s a buyer’s market, it could make more sense to stay and renovate to increase the value of your home and try selling down the road. If it’s a seller’s market, it may make more sense to sell.
#3 Construction Costs vs. Closing Costs
It’s typically cheaper to build an addition than to buy a new home that equals the space of your existing house plus the addition. However, improving has become pricier as the cost of construction materials has gone up. In a recent National Association of Home Builders survey, 81% of contractors were concerned about rising materials prices. Remodeling also requires taking out a line of credit or having the cash upfront to complete the job. “A new home allows for financing over the life of a mortgage,” notes Ms. Orloski. “But in the renovate or buy new decision-making process, you need to consider costs involved with selling your old house and buying the new one. That expense could make remodeling the better option.”
#4 Original Architecture vs. Individual Touches
Adding on or remodeling allows you to customize parts of your home and tailor them to your needs. It can be like designing a new house without the expense of a new house. Yet not every house is a good candidate. You have to consider if the renovation is worth the cost or if it’s even possible? There might be a reason to rebuild an old barn full of memories, while a 20-year-old tract house with a failing foundation is going to be more trouble than it’s worth. Make sure to have a professional assess the bones of your house to see what lies beneath before breaking any ground.
#5 Living Amidst Chaos vs. Starting Fresh
Finally, owners’ temperaments must be considered during the decision-making process. For those who don’t mind a potential mess and like to be part of the construction process, remodeling could be a good route. But think ahead as it can mean work crews in your house, noise, dust, dealing with contractors and additional costs like temporary living quarters. Owners who can’t live in hectic environments with people coming in and out should probably consider moving into a new home that fits their needs. “Before making any decisions, owners should talk to a local real estate agent about local housing inventory and a home improvement specialist to get an estimated renovation cost,” concludes Ms. Orloski. “At the end of the day, both are great options and can improve a family’s quality of life for years to come.”