Should I Remodel or Move?
We are currently expecting our first child here in the next week or so. It has certainly been a mad dash to get our house ready, from doing the nursery to making sure everything is up to date and in good order. We had water damage from a storm a little while back, so we re-did our bathroom and replaced our roof. We currently live in the city so eventually we are thinking we might outgrow our row home. If your family is growing or the kitchen can’t keep with all the mouths that you have to feed then you might start feeling like you’re not getting everything you want out of your home. The decision between moving, remodeling, and renovating is never easy, trust me. Emotions can be very high when remodeling your home. I know this was very true for us when we were making updates to ours but now that they are mostly complete, we are so happy we did them. If we ever decided to move out from our current home, it would be a very hard decision as we have had so many amazing memories there like getting engaged and married. Here are three essential questions to discuss with your family to help you evaluate the pros and cons of remodeling or moving.
1. How much is this going to cost?
At the end of 2023, many experts predicted that 2024 will be a better year for folks looking to buy a home. While there are still more prospective home buyers than home sellers, average mortgage rates have dipped slightly to start the year. An expanding economy and a pause in interest rate hikes from the Federal Reserve could also lead to more new houses being built. But even if the housing market does cool in 2024, it’s likely that buyers will still be paying more for a house than they would have in recent years.
That makes renovating or remodeling compelling alternatives. Current homeowners who are locked into a low mortgage rate could shop around for a home equity loan or invest their cash in upgrades to their home. When market conditions make a move more favorable, your improvements might make your current home a more valuable and attractive asset.
Of course, the “cheaper” option can be plenty expensive too. The average renovation project costs around $22,000. We went into remodeling our bathroom with a certain budget, and this was easily exceeded. You never know what you are going to find once you begin tearing down walls or fixing electrical and plumbing. Our row home is over 120 years old so this should be factored into the budget when making the decision to remodel. A major remodel, like adding a bedroom, potentially could reach six figures. That’s a lot of cash you could be putting to work in other ways, even if it’s just earning high interest in a savings account for the next year or two.
2. How do I want to spend my time?
Contractors get a bad rap. Yes, they can be difficult to work with. But the good ones are also managing variables beyond their control: shocks to the supply chain, labor shortages, volatile material costs. Still, their problems will be your problems throughout a remodel or renovation. You might end up feeling like hiring someone else to do the work has become its own job. Do you homework when looking at contractors, read reviews, and ask for references to ensure that other homeowners are not only happy with the work they did but the experience. Nobody wants to come home to your house in disarray from all the work that they did.
Are you considering doing the job yourself? Folks who are handy might enjoy designing and executing their own home improvement project, especially retirees who could use an extra activity to fill their schedules. Try to be realistic about your capabilities, gather all available information about your house, and plan ahead. One wrong swing of the hammer and your fun renovation might turn into an emergency repair.
3. How will the end result affect you and your family?
Occasionally the financial costs of a move are much smaller than the personal costs. Yes, you might spend more on taxes and living expenses in a new house. But if you move too far away from your family and friends you might have to build a new social network. You’ll also have to consider if moving is going to make it easier or harder for you and your family to do things you love doing, like playing sports or going to the theater and don’t forget about work. Will you still be within driving distance of your current employer?
Upgrading your existing home might create smaller but more welcome changes. With an extra bedroom, you might be able to accommodate more visiting friends and family. Maybe a beautiful new deck and swimming pool will turn your home into a neighborhood social hub. But maybe with time these improvements will fade or you will even outgrow your home and you will start thinking about moving again.
No matter where you live, your home will always be a major line item on your Financial Plan. We are happy to discuss your current home situation and any changes you’re thinking about making.
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~Portions Adapted from ROL Advisor~
