Beth and Mark have lived in a century-old house for the past seven years. The house, which was always on the small side for them, now feels decidedly smaller with the birth of their three daughters over the last five and a half years.
They’ve done some minor remodeling work over these years, including upgrading the electrical wiring and upgrading the kitchen. They love their neighborhood, which is around the corner from where Beth grew up.
Do they remodel or move?
It’s a complicated question, since most families become attached to a particular home once they’ve been there more than a few years. A location starts to feel like home, as you get to know the shopkeepers and local postal clerks. Children who feel secure and happy in school tend to do better than children who often change schools.
On the other hand, the size of your property may not be big enough to add on the square footage you want or need. Or, you may not be able to swing the cost of moving out while you doing a gut renovation and addition to your home. Or, you may not like, or are allergic to, sawdust, plasterdust, and other chemicals used when renovating a home.
Moving to a different neighborhood may afford you the opportunity to change your lifestyle. Often, if you move further out in your metro area, you can buy more house, more land, or both for about the same cash as you’ll receive from the sale of your existing home. By keeping your housing costs the same each month, you may be able to retire earlier, work part-time, or start a business from home.
And yet, if you’ve lived in your home for the past five to 10 years, the neighborhood has probably increased in value, perhaps substantially. By bringing your home up to the neighborhood standard, or slightly better, you may actually realize thousands, or hundreds of thousands of dollars in profit.
So how do you decide whether to move or renovate your home?
Consider remodeling if you love your neighborhood, school district, and commute to work. If you’re not happy in your home and neighborhood, there’s no reason to stay there, even if you can realize a profit on the renovation.
Renovating your home is time-consuming and stressful. The silver lining of your remodeling project will be to end up with a home you’re as happy with as the neighborhood in which it is located.
The next step is to determine if your lot size is big enough to add on the space you need. Not sure? Check with the building or zoning department of your city or village hall to find out how big a house you can build, and what kinds of setbacks or other limitations might hinder your renovation.
Finally, most people pay for a renovation by taking out a home equity loan or line of credit. If you don’t have any equity built up in your home, you can talk to a lender about a construction loan that you could refinance based on what the home will be worth when your renovations are complete.
Talk to a real estate agent about how much you could get for your home once the improvements are finished.
Consider selling your home and moving if the space and amenities you want and need would make your house the “white elephant” of the neighborhood. In other words, it isn’t smart to build a house that’s so expensive or so outsized for the area that no one would want to buy it from you. When it is time to sell, you’ll end up with a house that’s difficult to market and may take months or even years to unload.
You should also consider selling if you can’t live with the mess, noise and stress of a renovation (which will almost certainly cost twice as much as you originally estimated and take nearly twice as long). Or, if you want that lifestyle change.
Your decision may boil down to convenience. With two jobs, kids, and a host of other things going on at the same time, it may be easier to find a new house than plan for and schedule a renovation.
Then again, the easiest thing of all is to simply make do with the house you have.
July 9, 2001.