Deciding Whether to Renovate or Relocate
If it’s time to update your living situation, you may be trying to decide whether you should renovate or relocate. This is a good question to consider because the decision to either remodel or move comes with significant implications, especially on your finances. Below are some factors to consider when choosing between these two options.
Can you afford to Renovate or Relocate?
Cost is an important consideration, especially if you are still paying off a mortgage. Moving comes with its own set of expenses, from moving costs to down payments. This could also mean a new mortgage at a higher interest rate.
On the other hand, some renovations are also costly. A bathroom renovation can set you back $5000 to $35,000 while a kitchen update is even more, averaging between $50,000 – $60,000. Since a renovation will help improve your home’s resale value, you’re likely to recoup this cost.
Attachment to Your Home
How emotionally attached are you to your home? Location matters, especially for families with kids who have connections to the house, school, and neighborhood. Most families have emotional attachments to the house that their kids grew up in, which can add to the stress already associated with moving.
How is the local real estate market?
If you are leaning towards buying a new house, consider the market. Even if it’s cost-effective to move right now, are you able to get the best price for your home in today’s market? Consider market trends to see if this is the best time to sell or if it’s better to wait.
Also, look at the capped value for homes in your area if you are leaning towards a renovation. While renovations may help increase the value of your home for resale, it’s not good to overspend on renovations. For instance, if you make upgrades beyond the comparable properties in your area, a buyer may opt for a lower-priced similar property that they can make their own.
What is your timeline?
Moving to a new house that has everything you want is often a faster solution than renovating. If you have the patience, however, you can take the time to gradually introduce improvements or upgrades to your current home until it meets your needs.
Factors That You Can’t Change
The decision to remodel or sell may rest on other major factors that you can’t change, like the quality of the neighborhood, distance from your workplace, or accessibility to your kid’s school. The house may be too small and there is not enough space to add square footage. In this case, the best option would be to move.
Before you decide to renovate or relocate, weigh all the pros and cons. Consider all of your options to see which decision will produce the best outcome for you and your family.