Renovate or Buy New: What’s the Best Choice?
If you’re feeling like the house where you live is no longer big enough to serve your needs, you might start thinking it is time to move or change some things in the home’s layout. But there may not be an obvious answer to whether you should move to a new place or renovate your existing home. Multiple factors can influence your decision to put more money into your existing property or go looking for a new one. Here are some of the top things you should consider as you try to decide what course of action to take.
Evaluating the Costs
Budget is one of the largest factors that you have to consider as you evaluate your options. Newer homes might have updated technology and features, but they can come with a large price tag that translates into a bigger mortgage payment each month. If the real estate market where you are looking to purchase is thriving, you can end up paying more than the asking price for the home you want. By contrast, renovations can be kept within any budget you specify and be done to match your taste and style. You can complete one room at a time, allowing you to spread out the expense over time instead of paying for the work all at once. Some 28% of homeowners say that renovations are more affordable than buying a turnkey property that serves their needs.
As you assess the costs for each, be sure to calculate all the expenses involved. Moving often means paying for a moving crew if you can’t get friends and family to help, paying closing costs on a new mortgage, and taking at least a few days off work to complete the move. Renovating is typically too complicated to do yourself, requiring you to hire skilled contractors. However, living with the renovation happening in the home can be stressful, causing you to need to pay for a few nights in a hotel.
Assessing the Neighborhood
Another factor is where you currently live and how well you like the neighborhood. If you have a property in a large city where moving is expensive and difficult, renovation might be much simpler than finding another home in the same area. You won’t have to worry about changing your children’s school, modifying your commute, and getting used to another area.
For example, there are many homeowners in high cost of living areas like London or New York City. The average price of a condo in Manhattan was $1.9 million back in 2017, and prices have only gone up since then. If you aren’t going to make large changes that cause you to remove structural elements from the home, like knocking down a wall to open up a room, renovations to your current home can be kept very affordable.
Looking at the Long Term
Consider your long-term plans as you decide on whether to purchase a new home or renovate the one you currently live in. If your home is crowded but your children are already in their teens, it may not be worth purchasing a new place with a higher monthly mortgage payment attached. Renovations to make the space function better might be the best bet to get you through to the empty nest stage. While a new home may not seem that expensive upfront, over the life of the mortgage you will pay a lot of interest and other costs.
By considering all of the expenses associated with changing things in your home and weighing this with the cost and effort of a move, it will become clearer how you should proceed.