Remodel or Buy a New Home? Which is Right For You?

Have you decided that your home isn’t big enough? Or, perhaps your home needs to be updated in order to keep up with your lifestyle or modern conveniences. In either case, you might want to seriously consider purchasing a new home rather than investing a great deal of time and money into remodeling your home. Whether you’re in the Austin real estate market or elsewhere, in addition to the advice contained within, it’s also typically a good idea to check with a local Realtor, as all real estate markets are local.

While the common perception is that remodeling a home is less costly than simply upgrading to a new one, many find the opposite to be true. Or, in most worst case scenarios, making a move to a new home may result in breaking even where your finances are concerned. When it comes to stress and your time, on the other hand, moving to a new home is often the best option. After all, remodeling a home can take months or even years to complete depending upon what you are doing to the home. Furthermore, whether you are doing the remodeling yourself or hiring someone else to do the job, the remodeling process can be quite stressful. Not only do you have to deal with living in a home that is in shambles, but you also have to deal with the stress of waiting on workers and on the materials you need.

Of course, there are times when buying a new home is not the better option. For example, in order to break even or to come out ahead financially, you generally should have lived in the first home for at least 5 years. If you have only lived in a home for a couple of years, you are unlikely to have built up the equity that is needed to move to a new home without taking a loss. Similarly, if you have special ties to a particular neighborhood or if there is something special about your current home, you may be reluctant to move. In this case, the sentimental value of your current home may outweigh the savings you are likely to enjoy by simply moving to a new home. Likewise, some Central Austin homes for sale garner a higher price because of the “charm” associated with older homes, and in these instances you must learn to do a partial or selective remodel if one at all, else face devaluing your home and losing costs associated with the remodel.

Before you decide if it is better to remodel or to move, there are several things you should take into consideration. First, you might be able to avoid either option by simply decluttering your home, refurbishing certain parts of your home or repurposing certain rooms. Clearly, all three of these options would be less costly than buying a new home or completing a full remodel of your home. Furthermore, when considering the costs associated with remodeling, keep all of the following in mind:

• The cost of construction
• The cost of financing
• The added costs of having a larger home, including higher utility costs, property taxes and
  homeowner’s insurance

When it comes to figuring the costs of moving to a new home, all of the following should be considered:

• Real estate commission costs
• The costs of a new mortgage
• The increased costs of utility bills, homeowner’s insurance and property taxes if moving to a
  larger home
• The cost of purchasing new window treatments, furniture and other items if necessary

Clearly, you should also consider your financial situation when deciding which is right for you. For most, purchasing a new home is an easier option because you are absolutely clear on what costs are involved, whereas there are many unknown variables and unexpected costs associated with a remodel.