Is your current residence no longer meeting your needs?
If that's the case, you may be facing a dilemma: whether to relocate to a new home or renovate your existing one. Making this decision can be challenging, as there are several factors to consider, including costs, long-term financial implications, and overall quality of life.
Undertaking a major renovation project can be a significant commitment. It involves hiring contractors, choosing materials, managing a budget, and dedicating a considerable amount of time and energy. Additionally, you may have to endure the inconvenience of living through construction or temporarily relocating to another place.
On the other hand, moving is known to be a stressful endeavor. In fact, a survey found that 40% of respondents considered buying a new home as "the most stressful event in modern life."1
So, which option is better for you? Let's delve into some of the factors you should consider before making a decision.
1. What Are Your Motivations for Change?
It's possible that some of the limitations of your current home can be addressed through renovations, while others may require a move.
Certain issues, such as outdated kitchens and bathrooms, can be easily resolved through a remodel, resulting in a significant improvement. In many cases, a relatively minor renovation can greatly enhance your home's enjoyment.
Other shortcomings may be more challenging to fix but are worth exploring to understand your options. For example, if your home feels cramped or lacks certain rooms, you might be able to make changes like adding an extra bathroom, creating a dedicated office space, or finishing an attic or basement. It may even be feasible to build an accessory dwelling unit or an extension to accommodate a multi-generational family.
In fact, since the start of the pandemic, many Americans have remodeled their homes to adapt to changing needs. According to the National Association of the Remodeling Industry, 90% of their members reported an increased demand for renovations starting in 2020, with 60% indicating larger-scale remodeling projects.2
However, the viability and cost of these significant changes depend on factors such as zoning, permits, and your home's current layout. Consulting with an architect or contractor can help you make an informed decision. We can refer you to our trusted partners to ensure you receive excellent service.
There are situations where rebuilding your home from scratch wouldn't solve the problem. For example, if you've changed jobs and now face a lengthy commute or if you need to live closer to an aging family member, moving may be the only solution.
Conversely, if the shift to remote work has given you more location flexibility, you might want to seize the opportunity to relocate to a new area. A study in 2022 found that nearly five million Americans had already moved since the start of the COVID-19 pandemic due to increased remote work flexibility, and an additional 19 million were planning to move soon for the same reasons.3
Moving may also be the best option, even if you're satisfied with your current location. If you desire a larger backyard or significantly more space, a local move might be suitable. Similarly, some frustrations, such as living on a busy street or far from essential services, cannot be addressed through renovation. I am well-versed in this area, born and raised!, and can help you determine whether another neighborhood might better suit you and/or your family.
2. Which Option Makes the Most Financial Sense?
Both renovating and relocating entail costs, so it's essential to assess the financial implications of each choice before proceeding.
The costs of a renovation can vary significantly, so it's crucial to obtain multiple estimates from contractors to understand what it would take to achieve your dream home.
Consider all potential expenses, including materials, permits, and updates to electrical and plumbing systems. It's also prudent to add 10-20% to your total budget to account for unforeseen issues.4 If you plan to handle some or all of the renovation yourself, don't forget to factor in the value of your time.
Renovations can also incur hidden costs, such as additional home insurance, short-term rentals or hotels during the renovation period, storage units for belongings, and the need to dine out or use laundry services if essential appliances are unavailable at home.
Furthermore, remodeling choices can impact the long-term value of your home. Some projects may increase your home's value enough to offset the investment, while others could potentially hinder its resale potential. For instance, while you may enjoy additional living space, garage conversions typically aren't popular with buyers.5 On the other hand, refinishing hardwood floors yields an average return of 147% at resale.2 The specific impact of a renovation depends on factors like work quality, material choices, and buyer preferences in your area. We can help you assess how your planned project is likely to affect your home's value.
The cost of a new home varies greatly depending on the desired features. However, you may find that moving to a home that already has everything you want is more cost-effective than making significant changes to your existing property.
For instance, the expense of adding a downstairs bedroom suite or opening up a closed floor plan could exceed the cost of buying a home that already includes those features. However, simpler changes and updates may not outweigh the expense of relocation.
If you're considering a move, consult with a real estate agent early in the process. We can evaluate your current home's value and estimate the price of a new home that meets your needs, helping you set an appropriate budget and expectations.
Remember that the cost of buying a new home doesn't end with the purchase price. You must also consider additional expenditures such as closing and moving costs, as well as fees associated with selling your current home. Additionally, comparing current mortgage rates to your existing one will help you understand how a different rate could impact your monthly payment. It's worth noting that mortgage interest rates are typically lower than rates for other types of loans, which means you could pay less interest on a new home purchase than you would on a remodel.6 I am happy to refer you to a lending professional who can assist you in exploring your financing options.
3. Which Option Will Cause the Least Disruption to Your Life?
The final but crucial consideration is the time and inconvenience involved in each option since both renovating and relocating entail significant disruptions.
Don't underestimate the time and effort required for a large-scale renovation, even if you hire a general contractor. You will still need to make numerous decisions and considerations. For example, even a relatively basic kitchen remodel involves choosing cabinets, tiles, countertops, paint colors, fixtures, hardware, and appliances from a seemingly endless array of options.
And don't assume that you can avoid packing and unpacking if you stay in your current home. Most renovations, whether in the kitchen, bathroom, or flooring, necessitate temporarily removing your belongings during the construction process.
The timeframe for a remodel is another factor to consider. Due to high demand for contractors and ongoing material shortages, you may face a considerable wait before getting started. Once the project is underway, it can take several weeks to months to complete.7
Consider whether you can continue living in your home while it's being renovated and how that would affect your daily routine. For instance, being without a functional kitchen for months can be frustrating, inconvenient, and costly, as you'll need to purchase prepared food. Remember that delays are common in construction, so contemplate the additional challenges they may present.
Finding a new home and selling your current one also requires a significant amount of time and effort. According to the National Association of Realtors' 2022 Profile of Home Buyers and Sellers, the average buyer searched for 10 weeks and visited a median of five homes.8
However, in many cases, the timeline for a move can be shorter than a major renovation. Once you find a suitable home, it typically takes between 30 and 60 days to close if you're obtaining a mortgage, and the process is even faster if you're paying with cash.9 Moreover, you can search for your dream home without the inconvenience of living in a construction zone.
Nevertheless, moving has its own stress and disruptions. If you're selling your current home, you'll need to prepare it for the market and keep it ready and available for showings. Once you've found a new place, the packing and moving process takes time and effort, as does settling into a new home, especially if it's in a different neighborhood.
Fortunately, if you choose to pursue the relocation route, we're here to help make the moving process as smooth as possible. I can assist you in finding a property that meets all your needs, selling your current home for the best possible price, and referring you to excellent moving companies for packing and transporting your belongings.
WHATEVER YOU DECIDE, I CAN HELP
Deciding whether to renovate or relocate can be overwhelming, but it also presents a significant opportunity to enhance your quality of life.
There are various factors to consider, from the potential impact of renovations on your home's future resale value to the current market dynamics of your neighborhood. We're here to help you navigate through your options. Contact me for a free consultation!
The above information is for informational purposes only and should not be considered financial, legal, or tax advice. Please consult the appropriate professionals for advice tailored to your individual needs.
- HousingWire - https://www.housingwire.com/articles/46384-americans-say-buying-a-home-is-most-stressful-event-in-modern-life/
- National Association of the Remodeling Industry - https://cdn.nar.realtor//sites/default/files/documents/2022-remodeling-impact-report-04-19-2022.pdf?_gl=1*3pfs0m*_gcl_au*NTU2MDQ0MzAyLjE2ODMyMzgzMTY
- Business Insider - https://www.businessinsider.com/5-million-people-moved-because-of-remote-work-since-2020-2022-3
- Forbes - https://www.forbes.com/home-improvement/contractor/home-renovation-costs/
- U.S. News & World Report - https://realestate.usnews.com/real-estate/articles/10-home-renovations-that-can-decrease-the-value-of-your-home
- Bankrate - https://www.bankrate.com/mortgages/mortgage-vs-home-equity-loan/#differences
- House Beautiful - https://www.housebeautiful.com/home-remodeling/a25588459/home-renovation-timeline/
- National Association of Realtors - https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers
- Forbes - https://www.forbes.com/advisor/mortgages/how-long-does-it-take-to-close-on-a-house/