One of the most common questions people ask me is whether it is smarter to remodel an existing house or sell and move to a space more suited to their needs. This is a very good, but complex question to answer, and it often brings up many factors. Some of them include:
- value of other homes nearby;
- type of remodel or addition;
- age of the house;
- comfort level of neighborhood;
- availability of desired features in an existing house;
- return on investment.
We can look at each one individually to help you evaluate your situation and come up with the best option for you.
The “value of other nearby homes” factor brings up that old adage “don’t overbuild for your neighborhood”. While this is basically true, you have to consider that neighborhoods in great locations tend to redevelop with new homes or upgraded homes eventually. If you are in a great location, you might start a trend of improving homes around you, and as we all know, it’s better to the first than the last! If you are in a newer neighborhood or not in a desirable location, the overbuild adage may be words to heed.
The type of improvement you want to make is very important. Simply updating finishes, or a kitchen or bath makeover is definitely something you’ll enjoy. You may not get a 100% return on the investment when you sell, but making your house into a place of comfort and enjoyment should override that concern. If you have in mind a porch or garage addition, again, the enjoyment of the improvement should rule. If you have in mind a large addition that will likely exceed the current value of the house, you should probably re-read the first factor paragraph.
The age of the house is an interesting one. The older the home, the more surprises you will find in a major remodel. You may find that plumbing or electrical needs to be redone, or that the structure isn’t what it needs to be. This may make your improvement more expensive than you thought. However, older homes tend to be in desirable locations, so the improvement or replacement may be worthwhile.
“We love the neighborhood” is something I’ve heard many times as an argument for remodeling. People get comfortable with their surroundings and are hesitant to leave. I understand and appreciate those feelings - I call it putting down roots. If this is how you feel, by all means make your house what you want, and others around you will likely follow suit.
Sometimes what you want is simply not available in the market. The “mother-in-law suite” is probably the most common example of this. A separate apartment for an older loved one is all but impossible to find, and the desire for these spaces will likely grow over the next decade or two, making it a good resale investment.
If all you care about is getting your money out of the improvement a few years down the road, you probably shouldn’t remodel. National statistics show that kitchen makeovers typically return 85% or so, new windows and doors are just below that, and new bathrooms are around 75%. All others fall below that 75% level, so there has to be more justification for the improvement than monetary return. For me, the overriding justification is personal enjoyment. Your home is where you should feel the utmost comfort and enjoyment!