Relocate to a new home or renovate? Old vs. new?
These are questions many homeowners wrestle with.
With mortgage interest rates at historic lows, many homeowners decide to finally build their dream homes — brand new. Others decide to renovate their existing homes or buy fixer uppers.
Whatever your decide, there are pros and cons. Before you invest time, resources and money into renovations or sign a purchase contract for a new home, here are some factors you should consider before making a decision.
The Arguments for Renovations
Costs: That 1920s fixer upper is beckoning you with one-of-a kind crown molding and turn-of-the century hardwood floors. Or, you’re considering staying put in your older home and renovating it to make it look brand new — updated kitchen, bathrooms and other features necessary for resale.
Don’t go with your gut. Make sure you take out your calculator and do the math.
Depending upon how many years you’ve got left on your mortgage — and if you want to avoid going into more substantial debt with a house that’s nearly paid off — renovation may be your best option if you want to save some cash.
Overall, renovations tend to be cheaper than buying new. Nationally, for example, the 2013 Remodeling Cost vs. Value Report found that adding a wood deck costs $9,327 on average and homeowners can expect to recoup about 77.3% — or $7,213 — of those costs. Renovated kitchens and bathrooms also make great selling features when a homeowner is ready to sell.
Same neighborhood: Some homeowners love their homes, neighborhoods and neighbors and really don’t want to move; they only want an updated home with new bells and whistles. It’s an emotional factor that you’ll have to consider if you decide to stay and renovate.
The Arguments Against Renovations
Construction: Renovations can only change a home so much. It’s highly unlikely that you’ll transform your low-slung ceilings into vaulted, 9-foot-tall ceilings that new home builders favor these days. And if the thought of adding a second or third bathroom to the 1950s bungalow with its one original bathroom gives you nightmares, you should buy new.
Lower property values: A 3,000-square foot home built in 1926 and renovated to include popular upgrades may not fetch the same value as a new home of the same square footage. Home renovations are often discounted, and you’ll want to keep this in mind if you’re looking at recouping your investment.
Construction surprises: Tear down a few walls and you might be surprised by the problems you never knew your home had. Renovations are notorious for expensive surprises such as mold, water damage and asbestos that would have otherwise been undiscovered. Budget 5-10% for these ‘surprise’ costs.
The Arguments for Buying New
Customization: Customize your new home from scratch, down to its position on the lot. Build as many bathrooms as you can afford. Don’t want a home down by the community pool? No problem. Your builder can place you in a lot closer to the subdivision’s entrance. New homes allow you to build your home the way you want.
Time: New homes often go up faster than you can blink: One minute, it’s an empty lot and the next minute a brand new home fills the empty space. Renovations are well known for taking months or even years longer than expected, while new homes are built in a matter of months.
The Arguments Against Building New
Land availability: If your heart is set on a new home in a land-locked area, you may be out of luck. Depending upon where you plan to buy, you’ll have to factor in the time it takes for new land to become available (it may take months). A new build in a newly developed area may also not boast the charms of a fixer upper’s established neighborhood.
Time: If the thought of spending long hours renovating a fixer upper or restoring an older home doesn’t make you giddy with excitement, a newer home might be the choice for you. Generally, new homes allow homeowners the ability to step in with fewer maintenance projects and are generally in move-in-ready condition. You most likely won’t have to paint, build a new roof or install an HVAC for awhile, though new homes don’t always translate into better quality.
Photo Credit: Flickr/Michèle Turbin