Should I Stay or Should I Go? 3 Things to Consider in Deciding Whether to Remodel or Buy a New Home

Should you stay or should you go?

Before making the decision to remodel your current home or buy a new home, consider these 3 factors according to Realty Times:

1.  Local Market Conditions:

There are 2 parts to buying a new home usually - selling your current home and then getting a good price and rate on a new one.  Check with your local real estate agent on the current market conditions in your area and the area you want to buy in.  Home prices and inventory can play significant roles in this process.  Some markets may be favorable to selling your home and then using the proceeds for a down payment on a new home... but some may not.  It is important to do your research on market conditions before making this decision, to avoid having to back out of a deal down the line.  You don't want to commit to a purchase and sale contract to  buy a new home, only to realize your current home either won't sell for the amount you need to purchase the new home or won't sell in the current market conditions in your area.

2.  Counterproductive Upgrades:

Homeowners should only consider remodeling if the upgrades will increase the value of their home over time.  Adding upgraded smart home appliances, energy efficient windows, and lighting for example are the most common upgrades that increase home value over time.  Remodeling can be less expensive than buying a home, but coming up with the capital to do so may require a home equity loan or line of credit, which creates new debt.  Be sure that the project(s) you undertake are not money pits and remove as many unknowns from the equation of remodeling as possible (ie get inspections or opinions of contractors if necessary before ripping up an area of your home!).  

This is a very useful Cost vs. Value 2014 report in evaluating what remodeling projects to take on in your current home:

Cost vs. Value 2014 Report

3.  Future Market Conditions:

Do your homework on future market conditions in your area and the area where you want to buy a new home.  Is the property walking distance to schools, parks, malls or other amenities?  If so, this will increase the value of the home, rather than if a home is only driving distance to everything.  If you see or hear of a new construction project being built near your current home or new home, inquire further about it.  Although construction in the short-term may be a pain to deal with, it may add value to your home or new home and should influence your decision whether to stay put or move to a new home.  

 Bottom line: Do your due diligence in deciding whether to remodel or buy a new home.  And contact us with any questions you may have about current or future market conditions in your area.