The proliferation of home renovation shows on television today has many people fascinated with the idea of renovating their home or buying a fixer-upper. Just what are the real costs of renovation and moving? What is the best option for your family? Here is a rundown of factors to consider when choosing whether to renovate or remodel your current home versus moving into a new home.
Remodeling vs Buying New Home
Let’s start this discussion with the intangible factors involved in remodeling and moving. These are the things that you need to think about that do not have a specific dollar amount tied to them.
Consider your emotional investment in your home or neighborhood. If you have school-age children, you’ll want to take their feelings into account as well. Finding a brand-new home in the same school district might not be that simple. On the other hand, if what you dislike about your home is the location, the yard, the style, or the neighborhood, no renovation in the world can fix those things.
The other “non-cost” consideration involves your homeowners’ association and local building codes. If you need to add more space to your home or wish to change the architectural style of the home, there may be a lot of approvals to obtain, some of which may also have tangible costs, like building permits. Do not assume you can make changes just because you own the property. In many neighborhoods, that is simply not the case.
Should I Renovate or Move? What Are the Costs Involved?
Now that we’ve covered the intangibles, let’s look at the real costs of renovation vs moving. In addition to cost, we’ll also look at timelines and the return on your investment.
The more you build, the lower your cost per square foot will be. This means that new construction is inherently cheaper than renovations. Plus, the financing for the two types of projects is different. Few homeowners have the kind of equity in their existing homes to cover the cost of major renovations. This means that they will need to obtain a new construction loan that has interest rates that are significantly higher than their first mortgage rates.
The remodeling timeline can be difficult to manage. Most of the time, you will need to move your belongings out of the home and into storage. Then, you will have to find alternate housing while the renovations are being completed. That means just as much moving in/out as if you moved from one location to another.
You are also not in control of when the renovation is completed. There are no guarantees when it comes to contractors. Plus, you never know what kind of issues may be lurking behind your walls, ceilings, or foundation. Unanticipated problems will add time, as well as money, to your project.
Return on Investment
When renovating a home, you have to consider if the money that you are spending on your home can be recouped at the time you sell your property. This means looking at the initial purchase price of the home and the cost of your renovation. It is very easy to overcapitalize a remodeled home. This means that the money that you have invested in the home brings its value far above the neighborhood average.
It is not wise to own a $500,000 home in a neighborhood of $300,000 homes. You will find it difficult to sell later on down the road. This is something you seldom have to worry about with a new home. New homes are built in neighborhoods of similarly priced homes.
The New Home Advantage
As mentioned earlier, the more square feet you build, the cheaper it becomes. Because it is unlikely that you would add more space to an existing home than you get in the new home, your cost per square foot of construction is going to automatically be cheaper. Here are a few more advantages of new construction:
- You get exactly what you want. Even with a high-end renovation, there will be things about your existing home you cannot change.
- There will not be any hidden problems lurking behind that wall you want to remove—no electrical updates, plumbing problems, asbestos, or code enforcement issues.
- The home is turnkey. Just move in.
- You have greater control over the timeline. You are unlikely to need storage or transitional housing.
- The cost of moving is cheaper. Construction loans for renovations can run upward of 20-25%, which is significantly higher than a first mortgage.
- Everything in your new home will be the latest in technology, not just the new addition. That means better insulation and lower electric bills.
Is It Better to Remodel or Buy a New Home?
Ultimately, whether you remodel or move is a personal decision. It comes down to your budget, your timelines, and your risk tolerance. For most people, buying a custom-built new home is more affordable and less risky and will get you into your new home much more quickly than a renovation.
Buying a House in Raleigh, NC
You have many options if you want to buy a house in Raleigh NC. However, we believe that choosing one of our new homes in Mornington Estates is one of your best options. We have seven different floor plans to choose from and both completed homes and lots are available just waiting for your finishing touches.
All of our homes are built with energy efficiency in mind. Our energy-saving features include the latest sealing techniques, insulation, and energy-efficient windows, as well as, the latest in HVAC technology, water heaters, and appliances. We pride ourselves on our attention to detail and well-constructed homes.
New Houses in Raleigh NC
Raleigh, NC, is a wonderful place to live. It does not matter if you are a longtime resident or a newcomer; you will find Raleigh to be a great area to live. Restaurants, shopping, a vibrant downtown, and loads of outdoor activities surround you. This is most definitely one of the best all-around cities to live, work, and play.
At Mornington Estates, we build custom homes at affordable prices. Our homes have an understated air of elegance. We have ranch homes and multi-story homes. Many of our homes include garages large enough for recreational vehicles. With four phases of construction planned, we are sure to have a neighborhood that fits you perfectly. Walking trails, creeks, and ponds wind through the property. We are far enough away from downtown to avoid the crowds yet close enough to be convenient to all the amenities.
We look forward to meeting you and showing you the perfect property for your new custom home. Call us today to set up an appointment. You will be glad you did.