Call (202) 596-8101 | Email us!
facebook linked in twitter youtube
Connect with us

Decisions, Decisions: Remodeling vs Moving

In these times of soaring home prices, many homeowners in the greater Washington DC area wonder whether it’s better to remodel and get more life out of their existing home, or to move up to a larger home (or downsize, as the case may be). There is never really an absolute right answer to this question, as each situation is unique to the home, the family, the neighborhood, and the larger real estate market.

It also largely depends on the what improvements are needed to make you love your home again. Some improvements you simply may never get back much on the investment, and others will raise your home value considerable.

Where to Start

List all the things you want in your new home. Upgraded kitchen, walk-out basement, master suite, shorter commute, etc. There will be some things you want in your next home that your current home simply cannot provide. For instance, you can invest in upgrading the kitchen, but if your home is on a crawl space, getting that walk-out basement will be cost prohibitive. You can add on a room edition for more space, but there is little you can do about the commute, unless you change jobs. If your yard is the size of postage stamp, there really isn’t much you can do make it bigger. You will need to assess how important each of these considerations are to you.

Some things to consider:

  • School districts
  • Community amenities/features
  • General quality of life
  • Size of yard and general layout
  • Traffic – within your community and in your commute
  • Access to grocery and shopping, restaurants, recreation, etc.
  • Commute time
  • Proximity to family/friends

Notice that all of the items listed above are all considerations that can’t be changed by remodeling your home. If you are placing a high priority on items in the list above, it might make more sense to move. But if you LOVE your location, then remodeling might be an option.

Analyze Costs

Here is where things start to get a little confusing, because costs of improvements may vary by where you live, as well as the ROI you may receive on those improvements. And one thing you need to be careful of is “over-improving” your home. You may be able to add on 1,000 sq feet, put in a pool, or splurge on high-end, commercial-grade kitchen appliances, but if you live in a community of starter homes, then you will price your home right out of the market. You will never get back what you put into it.

Prioritize the improvements you want to make, then do some research on what the costs will be to make those improvements. Anything that does not drastically change the floor plan will cost less than moving walls and adding square footage. The cost also goes up if you need to move load-bearing walls, change the roof-line, add or move plumbing/electrical wiring/HVAC ducts, etc.

A good resource is the 2018 Cost vs Value Report. With this report you can ballpark what the common costs are for a typical remodel in your area, compared with the relative value you add to your home. A REALTOR® can also help you get even more strategic, with knowledge of the homes for sale or sold in your neighborhood, their features and upgrades, etc.

Another consideration is that costs of remodeling are constantly going up. Materials cost and labor cost increases are a concern for contractors, according to a recent National Association of Home Builders survey. If you anticipate that your remodel efforts may span several years and multiple projects, then you may make your life a whole simpler (and less expensive), by moving to a home that has more of the features you are looking for.

Don’t overlook the hidden costs, either. If you plan to finance your remodel with a home equity line of credit or a cash-out refinance, then you will have interest and loan original costs, points, etc. There are costs for permits, hassles with HOAs, and possible the cost of temporary housing if you need to move out for a short period to facilitate a major remodel.

On the flip side, if you think selling your home and moving might be a better option, you need to consider the cost to sell: improvements/repairs needed to prepare your home for sale, REALTOR® costs, financing costs on the new home and closing costs on both the sale and the purchase, moving expenses, etc. If you overlook these costs you may find that yourself losing money in the long run.

How Long Will You Stay

The question of how long you will stay in your home is difficult to answer, since no one has a crystal ball. Your job could get transferred next month, or you may discover than an elderly parent needs to come stay with you, which will changes your needs drastically. However, the key to recouping the costs of a remodel is how long you plan to stay in the home. If, even with improvements, you see yourself moving in less than 5 years, then you may want to limit your remodel to a few key strategic improvements that will have the greatest impact on your home value (such as energy efficiency). You may also find that your current home value will provide you enough of a down payment to move up your time table for moving.

Can you afford to move? 

Related to the question of how long you can stay in your current home is whether or not you can afford to move. Take a look at what homes are going for, with the features you want, in the communities and neighborhoods you desire. If you are going to have to make too many compromises to be able to afford a home in the school district you want right now, or if you the size of home you desire is still out of reach even after you have the sale proceeds of your current home, then you may need to stay put a little while longer. Focus on strategic improvements that will have the greatest impact on your homes’s value, but don’t go crazy with a remodel, so that you can continue to save for the down payment on your dream home.

We can help you analyze your home’s value and the value of any improvements you want to make vs the comps in your neighborhood. When it is time to sell or buy a home, having a local team you can rely on will make the process a smooth one. Call the Realtors® who love where they live and understand the local real estate market. ADMC Realty Group happily serves the communities in and around the Washington DC, Maryland, and Northern Virginia areas. From start to finish, we’re here to help with all your Real estate needs. Give us a call at (202)596-8101 or email us at [email protected].

Leave a Reply

Affiliated with RE/MAX Allegiance | (202) 547-5600

Copyright © 2020 ADMCRealtyGroup    Log in     Design by Real Estate Tomato     Powered by Tomato Real Estate Blogs