Is it better to buy a new house or remodel an existing one?
Moving houses ranks among the most stressful events you’ll go through in your life. So it’s no surprise that three-quarters of Americans (76%) would rather renovate their current home than go through the process of buying a new one, according to Zillow research.
Renovating your home may appear easier and more cost-effective than buying a new house, but it isn’t always the right decision and home improvements can also become costly. It’s therefore vital to weigh up the benefits and potential challenges of renovating your current home or purchasing a new property.
Remodeling vs. Moving
The most significant factor in deciding whether to remodel your existing home or buy a new house will likely come down to cost. But it also relies on issues like whether your home is in the right location, offers enough space for your family, if it provides everything you need to live an easy life, and the memories you may leave behind.
The key considerations you need to weigh up when deciding whether to buy a new house or remodel an existing one are:
Cost: Cost is a significant factor in any home move or improvement decision. This will depend on the state of your current mortgage and how much money you’ve saved up. You should also consider the additional costs that could accompany a renovation project and a home purchase.
Emotional attachment: Your home may contain more memories than you realize. Things like milestones in the growth of your family or your first pet. Consider these emotional attachments and discuss them with family members before you go ahead with a significant life decision.
The state of the market: The value of your current home will be a key factor in whether to sell or renovate. This will depend on current market conditions and whether your home’s asking price has gone up or down.
Timing: Moving home could result in changes to your commute, mortgage costs, and schools, so timing is critical to whether you sell your home or renovate it.
The pros of remodeling
Renovation can be an easier option than searching for a new home, selling your current property, and upping sticks to a new location. The benefits of remodeling your home include:
Relative cost benefits: Home prices in the United States are at a record high, increasing by 30% from 2020 to 2022. The median home price has risen by 416% since 1980 and reached $428,700 in the first quarter of 2022, according to the Federal Reserve Bank of St. Louis. Home renovations are relatively more cost-effective, with the average remodel costing $47,583 and most projects costing between $17,921 and $78,011, according to Home Advisor. This can fluctuate depending on the size of the job, the room you’re renovating, labor costs, factors like electrical, HVAC, electrical and plumbing fees, and more.
You don't have to move: A critical factor in remodeling your home is you don’t have to go through the stress and cost of buying a new home and selling your old one. You also avoid the arduous process of moving all your belongings out of one property and into a new one. Moving home also throws up other issues like having a longer work commute, your kids having to move schools, or meeting new people in a new neighborhood. A home renovation can be beneficial if you’re comfortable with your current lifestyle.
Complete control of your home: Remodeling your home gives you the freedom to customize it to meet your specific needs and requirements. You can choose the materials and fittings and design the layout that makes your dream home a reality.
Increase your home’s value: A home renovation is a great way to boost the value of your home before you eventually sell it. New home additions and smart technology can increase the property's appeal and enhance your future net profit. This approach will require upfront costs, but it could be worth the investment in the long run.
Tax benefits: A home renovation can also be beneficial by potentially unlocking tax deductions. Most home improvement projects don’t apply, but some projects offer exceptions. This includes energy-efficient home improvements, upgrades required for medical care, improvements to your home office if you run your business from home, and works that boost resale value.
The pros of moving
Renovation may seem to tick all the boxes compared to moving home, but buying a new house can be the better option in some situations. The benefits of buying a new home include:
Cash in on your equity: Buying a new home could be a great option if your current home has helped you develop equity. If your home has gained value and is worth more than you owe on your mortgage, you could have an opportunity to sell and upgrade. Your sale price will need to be enough to cover paying off your mortgage, moving expenses, closing costs, and a down payment on your new property. Another option could be to downsize to reduce your monthly mortgage payments, remove any financial constraints, and address outstanding debts.
New area and environment: Sometimes a change can do your quality of life the world of good. Buying a new house gives you a chance to move to a new area and make a fresh start in a new environment.
Larger living space: A clear reason for buying a new house is to move to a larger living space than your current property can offer. If you don’t have the option to remodel your home to meet your needs, such as a larger floor space for a growing family, then buying a new home may be the best option.
It may be faster and less stressful: Moving house can be a stressful experience, but then so can renovating your home. Having work done to improve a property can lead to you living in a building site for a while or arranging for you and your family to temporarily live elsewhere, which could add extra costs. Moving homes can help you avoid that situation and upgrade your living space without the stress of renovations going wrong. However, moving home also comes with additional costs such as hiring movers, real estate commission, repairs to your current home before a sale, purchasing new furniture, home inspection costs, and more.
