With interest rates still hanging out high and home prices not really coming down, we are getting asked this question more than ever before.
Is it better to renovate and/or add-on to my current house, or should we just move?
Obviously it’s a HUGE decision. Should you pour your resources into your existing home, or cut bait and buy a bigger house that fits your needs?
Clearly there is no one-size-fits-all solution here. However, here are a few questions to ask yourself if you find yourself wrestling with this decision to gain some clarity.
LOCATION
There are a few things you really can’t change, and location is number one. If you love your neighborhood, your schools, your street, moving may not be the most appealing move. Adding onto your commute or moving farther from your favorite Mexican restaurant might be giving you pause.
Many of our clients life in neighborhoods they adore and have built close relationships with their neighbors. Sometimes moving over just a couple of streets can totally change your dynamic. Or maybe you’re close to family, close to the office, or close to friends.
Add into that, if you’ve been in your house longer than a couple of years, the prices of the other homes in your neighborhood have likely gone through the roof. Inventory might be low, or the other homes near you are boasting the same issues you have in your current house (wear and tear, size, layout, age).
If you love your location, that might be a vote for finding a way to make your current home work better for you. And if you aren’t location dependent, it might make sense to start exploring other options.
INVESTMENT
If you purchased your home pre-2022, you might be sitting pretty at a low interest rate. Changing out your 3% rate for a 7% rate or higher is going to substantially reduce your buying power. I ran the numbers on my own home, and to re-buy the home we built in 2021 at its current value and interest rate, my mortgage would nearly TRIPLE. Daaaang, that's a hard pass for me.
My guess is if you’re reading this post, you’ve already done your fair share of Zillow-ing on the matter, but in case you haven’t, run the math on how much you are into your current home, and take a look around at homes that fit your needs. What would it cost you to get exactly (or 90-ish%) of what you want in a new house?
If selling and buying another home means you’re going to be making a lateral move at best (if you can even swing that!), it’s probably not going to be worth it on the spreadsheet and in your quality of life.
For nearly everyone we work with, their wish list will cost them 30-50% more if they were to buy than if they made the home they are in into a home they love.
TIME
If I have you thinking that renovating is always the answer, hold up a moment.
If you think you’re only going to be in your home for a few years, undertaking a substantial renovation or addition might be the wrong move. A few of our clients (and was the case for myself in past homes) would need pour $250-500K into adding onto and renovating their homes. Sometimes the comps will support that, especially if your neighborhood is undergoing a huge construction turnover, but some won’t. If you’re not in it for the long haul (5 years typically, and ideally 10+ years) you might not get your money back out when it’s time to sell.
If that’s you, consider making smaller improvements to help you love the home you have without the wholesale renovation.
QUALITY
Let’s be real here – some homes were built better than others. There are the “good bones” houses and there are those…other houses. The ones where if you take a hard look at it you realize that it might be throwing good money after bad to continue to try to make a home work.
In that case, it might be best to let it go and have it serve as a starter home for another family.
In other cases, when the Investment math works, and I know this sounds crazy – you could scrape it down and start over! 😱
Many people don’t realize that this is even an option. They believe that you have to buy another house to tear down and it would never make sense to tear your OWN house down. Sometimes that’s a financial barrier, but more often than not it’s an emotional one (more on that in a minute).
If you snagged your home at a good rate, run the math (Designers, Architects, and General Contractors in your area can help you with these back-of-the-napkin calculations). Sometimes it will cost the EXACT SAME AMOUNT to build a new house than to try to renovate yours to match your wish list. True story.
SENTIMENTAL VALUE
This one isn’t always going to “math out” on a spreadsheet. Sometimes you just straight up love your home, even if you don’t like it, and moving is just something you’re not interested in. Big decisions aren’t always made in a logical, rational vacuum. Perhaps adding onto your home to get the space you need, or renovating the bits that are no longer serving you, is what you want to do just because it’s what you want to do.
Nobody gets that better than us.
We’ve helped clients transform starter homes into forever homes. Grandma’s home into a young family home. Or created the dream home that you’re excited for your grown kids to come back to.
Sometimes the heart wants what the heart wants. Work your numbers, and even if it’s not 100% logical, it’s okay if you can afford it!
HASSLE FACTOR
Renovating is a little bit like having surgery – it's a long road, but in the end you know you’re going to look and feel better for it. It's messy, noisy, and at some point when your entire life is dust, you'll wonder why you didn't just move.
But then again, as we all know, moving suuuuuucks. It's packing up your life, labeling boxes, and realizing you have an emotional attachment to a weird vase.
Choose your hard: the chaos of construction or the tango of moving trucks. Either way, you'll need patience, a sense of humor, and maybe a good therapist.
At the risk of sounding too HGTV-y, with all of that said, are you going to Love It, or are you going to List It?!?
