Your house may have seemed just right for you when you bought it. But over the years, your situation can change. Perhaps you had a kid or started working from home full-time. Maybe one-and-a-half baths and a smaller kitchen did not feel restrictive when you made the purchase, and now it does.
In this situation, you are faced with two options: renovate your home for your current wants and needs, or move. While staying put may seem like the simpler option, it “isn’t always the easier or cheaper path,” said Realtor.com. Then again, relocating is also an undertaking in and of itself, even if it is just a few streets over.
When does renovating make sense?
The “biggest reason to put the time and effort into renovating or expanding your home is its location,” said U.S. News & World Report. If you are attached to the area where your home is, whether because of your kids’ school, nearby neighbors or favorite shops, it can make sense to commit.
For homeowners with “strong equity and a solid mortgage, remodeling can be a savvy way to level up your living space without resetting your entire financial picture,” said Realtor.com. There are improvements you can make that boost livability and enjoyment now, with some even pushing up resale value later, too.
When is moving a better choice?
It’s “easy to think that a remodel will solve everything you don’t like about your home, but in reality, it’s not a magic bullet,” said Zillow. The truth is, “there are some things that a renovation just can’t fix, like having loud neighbors, an unfavorable school district, more or less square footage or the type of home you’re living in.” In these cases, moving will likely be a better use of your time and money.
While a whole new house may sound like a much bigger-ticket item, in some scenarios, it is still the more financially sound option. “If the desired renovation project exceeds $100,000 to $150,000, it starts to make more financial sense to move, especially when factoring in time, stress and lifestyle disruption,” said real estate agent Mike Toltzis to U.S. News & World Report.
What should you take into account when making the decision?
When weighing whether to renovate or relocate, consider the following factors:
Cost: Cost is a major component of this decision. Even if a renovation looks cheaper on paper, it “isn’t always a value-adding slam dunk, especially if your home is already priced near the top of the market,” said Realtor.com. For moving, look at more than just the sale price — also factor in moving costs, realtor commissions and perhaps a larger mortgage payment if your next house is bigger.
Timeline: Buyers “often underestimate the cost and time involved in remodeling,” said realtor Ashley DeHart to NerdWallet. But a “real estate agent can help weigh these factors against the convenience and potential savings of buying a move-in-ready home.”
Current real estate market: If you’re in a “down market and can’t get the price you want or need out of your home to move to a better property or neighborhood, it might make more sense to renovate,” said U.S. News & World Report. In a competitive market, it can be smarter to “sell your home while prices are high and homes are in strong demand.”
Long-term plans: “Will this home still serve your needs in five or 10 years? Or are you stretching it to fit a life it’s already outgrown?” said Realtor.com. You will also want to ask yourself whether you are renovating “because you love your home — or because you’re avoiding a harder decision.”