As families change, housing needs change. Young couples starting families or adding to their families find themselves in need of more space. Older couples with children leaving the nest find themselves with too much space or space that no longer meets their needs. The question then becomes do you move to a new home or remodel your current house to meet your needs? It’s a complicated question that needs to take several factors into account, and not all of those factors are financial.
The financial implications are obviously a critical component. Which option makes better financial sense? You need to gather some information before you can answer that question.
- How much is your current home worth? You can determine this by asking a real estate agent to perform a comparative market analysis. You can also see what similar homes in your neighborhood are selling for.
- How much will the planned renovations cost? Keep in mind that remodeling costs can often end up exceeding budget projections for a variety of reasons, including unexpected problems or changing the scope of the project. Don’t forget to add in the financing fees if you plan to finance your remodeling project.
- How much will a new house that meets your needs cost? Contact a real estate agent or visit some open houses of homes that have the features you want.
- Once you know the value of your home, with the added renovation costs, and the cost of a new home, you can compare the cost per square foot of each.
- How much will it cost to move? There is a significant cost to move beyond the price of the home. Taking into account the real estate commission, mortgage financing charges, moving costs, utility deposits and other expenses, the average cost of moving expenses is about $40,000.
- Will the renovations you plan to make price your home above other homes in your neighborhood? Keep the final home value at or only slightly above the neighborhood standards or you may not recoup your investment when you sell the home.
- How will the decision affect property taxes? Remodeling may raise your property taxes, depending on the scope and type of remodeling project. If you’re moving to a bigger home, that will also increase taxes, but downsizing to a smaller home may decrease your tax liability.
- Consider the costs to maintain both your current home and the home you’re considering. An older home will require more maintenance and repairs, as will a larger home.
There are many factors beyond financial that must be taken into account. Consider the location of your current home. If you love your current neighborhood and like your current home other than a particular aspect, remodeling could give you the house you want without having to relocate. This may be an especially attractive option if you have children who would have to change schools by moving. However, if you don’t particularly like your current neighborhood or there are multiple areas of your home that are no longer working for you, moving to a house that has what you need may be a better option.
Also consider which option is more likely to give you the house you really want. Remodeling will give you the control to get exactly what you want. If you move, you may not find a home with everything you want and you may have to compromise on some features. However, if your current home will not completely meet your needs even after renovations are made, it is probably best to find a home that will.
Finally, take into consideration the effort involved with both options. If you remodel your home, you’ll have to deal with the construction process. The time involved will vary depending on the scale of your remodeling project. Also depending on the type of project, you may have to stay elsewhere during construction, which both a hassle and an expense. But moving has its own hassles. Before you can move you will have to stage and show your current home, meaning strangers will be viewing your home and invading your space. You may need to make repairs and upgrades to your current home, the home you’re moving to, or both. And, of course, moving means packing and unpacking everything you own.