Relocating vs. Renovating
July 1, 2022
The decision to relocate or remodel can be a significant source of stress for many homeowners. There are pros and cons associated with each decision, and there is a lot to consider before choosing one or the other. We have provided several points and questions to ponder as you work your way through the decision process.
To begin, think about your current housing situation. How much equity do you have in your home? There are a few ways to think about this question. If you have built a large amount of equity, you likely have the resources needed to finance a renovation with a home equity line of credit (HELOC). On the other hand, you can afford to make a decent down payment on a new home. If you do not have much equity in your home, then a HELOC may be more difficult to obtain. Lenders typically require you to have at least 15 percent to 20 percent equity in your home in order to receive approval.
Now, think about your home as it relates to you and your family. Does your current home offer enough space? If not, can it easily be fixed with an addition, or would a new home be more suitable for your needs? What would you miss about your home? How about timing? If you have children, would they feel uprooted by a move, or are you looking for a new community to call your own? Emotional attachment to a community can play a big role in the decision to relocate or renovate, as it is often difficult to find exactly what you are looking for in a community you love. One of the biggest questions you can ask yourself is if your current home has the potential to make your life easier with the right renovations.
The current real estate market is an important piece in the decision to relocate or renovate. Is it a good time to buy or sell? This will involve some research of your desired area(s), assessing your home’s appeal to potential buyers, and speaking with an agent or someone with knowledge of the market, among other things. Understanding the risks of over-improving your home is another part of the equation. For example, if you live in a mid-priced neighborhood, it is unlikely that the addition of luxury amenities would result in a positive return on investment.
Cost effectiveness is another factor to consider. Which option will cost less? For renovations, it is helpful to calculate the entire cost of the project and then estimate how much it could increase the value of the home. Additionally, if you are entertaining the option of relocating, you should determine how much it will cost to move out of your current home, including such things as real estate agent costs and home repairs, as well as the closing costs and down payment needed to purchase a new home.
Zillow created a list of the home improvements that provide the greatest return on investment. From biggest to smallest, these include:
- Garage door replacement
- Manufactured stone veneer
- Minor kitchen remodel
- Deck addition (wood)
- Siding replacement (vinyl)
- Entry door replacement (steel)
- Window replacement (vinyl)
- Siding replacement (fiber-cement)
- Window replacement (wood)
- Deck addition (composite)
Adding improvements with a high return on investment will help you get the most for your home if you decide to sell.
Below is a list of common pros and cons associated with moving and renovating. As you look at them, ask yourself if you feel differently about the advantages and disadvantages after reading through the thoughts and questions brought forth above.
Pros and Cons of Moving
- Purchase a new investment
- Gain a new perspective
- Avoid dealing with renovations
- Moving costs
- The process can be stressful
- The risk of not finding the perfect fit
Pros and Cons of Renovating
- Customize to fit your needs
- Increase the value of your home
- Save money on moving and selling
- Hidden costs and/or delays
- Temporary construction zone