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Your current home no longer works for you – at least in its current state. However, I’m not sure if you want to sell or stay in place and refurbished to perfection.
In May 2022, the median national home price for active listings soared to an all-time high of $447,000 — at an annual growth rate of 17.6% — according to Realtor.com. However, HomeAdvisor data revealed that renovations and remodels average $47,825, which is also a huge investment.
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“Right now, prices are skyrocketing and it’s going to affect both ways – renovating and buying a new home,” said Amy Kite, real estate agent and owner of The Kite Real Estate Team, based in the Chicago area. “You’ll have to run some numbers and decide what works for you.”
If you’re serious about remodeling, you’ll also want to consider the availability of the materials you’ll need.
“Construction supplies are limited and you may not be able to purchase the items you want for your Renault, even if you are going this route,” she said.
However, she said buying a new home comes with its own unique challenges — including the ability to bid for it in your area — making that decision more difficult than it used to be.
“You are not given the luxury of browsing a number of houses and choosing from the one you want,” she said. “It’s a competitive market and you may have to pay more than you can imagine to get the home you want.”
Since the market is tough in many areas right now, she said, many people no longer find the process of buying a home enjoyable. Therefore, she recommended thinking deeply about renewal and approaching it with an open mind.
“You may not get exactly the items you were hoping for during the renovation, but with the right patience and determination, you should be able to complete the renovation properly over time,” she said.
On the other hand, Bill Gassett, a realtor with Maximum Exposure Real Estate, based in Hopkinton, Massachusetts, said he often sees homeowners in this situation wanting to make an important addition that doesn’t make sense from a financial point of view.
“For example, a person who owns a 3 bedroom, 1.5 bath home who wants 4 bedrooms with a master suite and a plush bathroom, will value the project and realize that adding the current value of their home to the price of what they want to do puts them above the same home they can get with these things. already existing.”
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This situation, he said, invites them to buy from somewhere else, especially if they can move to a better neighborhood.
“Often times, the current area in which they live will not support such an important regeneration,” he said. “In essence, they would seek themselves out of the neighborhood.”
While owning the prettiest home on the block comes with bragging rights, he said it’s not necessarily the smartest financial move.
“Going from a home on par with the others, to a better head and shoulders home, is not the best move in real estate,” he said. “You always want to have more expensive real estate around you that will increase your value – not the other way around.”
Of course, the decision to remodel or sell is rarely cut and dried.
You also need to consider the time and windfall expenses that can be involved in either option, said Baron Christopher Hanson, real estate agent at Coldwell Banker Realty in Stewart, Florida.
For example, if you’re remodeling, he said you want to ask yourself, “Will you be able to live comfortably and on a budget while your home is being remodeled? Or will you have to stay in a hotel or Airbnb for several weeks or months, especially if the remodeling is done?” Designing their kitchen, bathroom and plumbing systems 100%?”
He said you’ll also want to consider whether your architect, contractors, remodeling materials, and hardware will be readily available – just as planned – to quickly complete each stage and function on time and within budget – or if the remodeling will require twice the time and three Fold the money planned?
Conversely, if you choose to find a new home, he said you’ll need to factor in the price of finding a better home — along with the pressures of time constraints on emergency contracting — compared to the expenses and timelines associated with a remodel.
Hanson suggested doing a side-by-side analysis of the short-term costs, time, and personal stress required for each person in your household before taking any step—or not.
Additionally, he said you’ll need to anticipate the long-term financial implications of each track after five or 10 years.
For example, he said to ask yourself, “Will your newly remodeled home increase in value? Or is the new home you’re thinking of buying and moving in for a greater return on your time, investment, and personal stress instead?”
Taking the time to make an accurate comparison of short-term and long-term financial scenarios for redesign versus transfer isn’t easy, but he said doing so is a must.
The decision can be difficult, but as long as you thoroughly explore all aspects, you should be able to select the best option in the end for your money with confidence.
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