When you run out of space, or find you have too much of it, figure out what the hard and social costs will be to stay put or move
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Do you find you’ve outgrown your home? Or is it too big now? Maybe it’s just time for a change.
Here are some things to consider when evaluating whether to move or renovate.
Do you have enough total space? Would you need an addition or could you just change the way you use the space? Additions are costly. If you don’t have enough total space then you might be better off moving as adding an addition to an existing home can be very expensive and have a negative payback.
There are exceptions to every rule. If your property value is high relative to the house structure’s value, then you can make the addition work. But even then, price out the cost of a total replacement. Sometimes that is the best course of action on your high value lot.
If your home has enough space and you just need to update the space to meet your needs then it may make sense to renovate. This is often the case when it comes to merely updating the esthetics of a home. Even so, you may want to estimate the total cost of the project. Add that cost to what your home is worth and subtract the selling costs. Then look to see what you could purchase with those monies. If the home you could purchase is superior to your renovated one then, of course, just move.
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If you have to move walls and reconfigure the structure, the costs will be substantially higher. You could be looking at engineering reports, beams and at this point it may be best to just move.
Another factor to consider is the stress of living through the renovations. It can be quite disruptive for the whole family for several months. This can cause strain on family relationships, especially if you work from home or home school. A solution to this is to rent another home while your home is being renovated. This will, of course, add significantly to the total cost of the renovation and mean you move twice.
Perhaps you are doing the renovations yourself. This may make the renovation more cost effective and help with the decision to renovate. Keep in mind, however, that there is an opportunity cost to that. By that I mean, what is it that you are not doing — what income are you not earning because you are renovating your home?
If you have lots of energy, the know how, the time and you enjoy the work, then you can absolutely benefit by doing the renovations yourself. And if you are just updating and not moving walls it can be a great way to increase your home’s value with some sweat equity.
Your neighbourhood will also play a big role in your decision. Do you love your hood and your neighbours? If that’s the case then you may be OK with some extra costs compared to moving. If the neighbourhood has changed since you moved in or if your needs and wants for a neighbourhood have changed then your decision to move may be much easier.
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The availability of homes to purchase that meet your needs/wants is also an important consideration. Are there homes on the market that you love which would be a great fit for your new lifestyle? If you are in a hot market and you decide to move then you might want to have a back up plan to rent in case you can’t find your perfect new home. Or you could wait until the market cools and there is a bigger selection of homes available.
The downside to waiting is that prices could increase while you wait for your perfect home to come on the market.
Whether you decide to renovate or buy a new home, contact your local neighbourhood realtor for help in assessing your after renovation value. Knowing that value can affect your decision.
Dennis Faulkner is a realtor with Re/Max River City. He can be contacted with all your real estate questions at [email protected].
