It’s a question so common that TV shows like “Love it or List It” and “Move or Improve” are built around it: When it comes to improving your home, should you move, or should you renovate?
But the question takes on more urgency these days. Mortgage interest rates are hovering around 7 percent — a 23-year high — and costs to remodel are through the roof as well, due to increased construction demand along with the increvvased cost of goods and lack of skilled laborers in the market.
So how to decide? When you’re looking at whether your next real estate step involves an agent or a contractor, here are a few things to consider.
The Cost
Of course, the biggest consideration is how much it will cost to remodel versus how much it will cost to buy a new house and move. Not only that, the costs will vary in terms of short term versus long-term costs. Doing a renovation will cost more out-of-pocket immediately, but if you’re locked into a lower interest rate, it could end up costing less down the line. On the flip side, while selling your home could net you a large sum now, scoring a new home at a significantly higher interest rate will cost you more money as you make years of higher payments.
Also keep in mind that when it comes to buying a new home there are hard and fast costs — but moving does come with realtor fees, transfer taxes and other expenses. Likewise, a remodel can sometimes come with unanticipated extra money or blown-up budgets. In short, your decision should take into account your current financial situation while accounting for a few surprises here and there.
The Timeline
A home renovation often involves closing off rooms or areas of the home, cramming people and things into a smaller space and an inability to use essentials like the oven or shower. In drastic cases, you may have to relocate for a short time until major construction is over. Do you have the time and ability to live through a home renovation? Depending on the extent of your remodel, a part of your home will be likely unusable for anywhere from several weeks to six months or more — and that’s assuming that permits are approved in a timely fashion. Can you and your family handle the inconvenience?
At the same time, while the average move can take almost five months — from the search to signing the final papers to unpacking the boxes — it’s less disruptive to your family. Be sure to consider which type of change best suits your lifestyle, schedule and current living circumstances. After all, for some people, saving time and opting for convenience is as valuable as saving money.
The Market
Before making any decision, it’s important to do the market research. Is your neighborhood so hot that a sale right now will yield a big profit? Or is it up-and-coming, with a larger yield likely available down the line? With the right renovations, would your home have the potential to drastically increase in value, or are your desired changes not likely to add too much when you resell your home?
Start researching everything from neighborhood comps to real estate market conditions. As a homeowner, you’ll want to get the most out of your investment, and putting in a little research can be the difference between striking while the market is hot — or listing your home and getting an ice-cold reception.
The Emotional Element
Homes and neighborhoods are filled with love, memories and sentimental attachments. While not necessarily calculable on a spreadsheet, there is value in the emotional element of a home. If you love your neighbors and neighborhood, if you are invested in your schools, or if you can’t imagine leaving the place where you raised your family, it might be a better idea to remodel, allowing you to stay put and continue to build memories. On the other hand, the desire to be in a new area, on a quieter street, or in a different school district are home features that can’t be helped with a remodel.
By evaluating multiple factors, you can take steps to find a decision for you and your family that provides the best home with the smartest financial approach. Now, you can start making new memories.
