The decision between whether to stay in your home and renovate or move and buy a new home has been a popular debate across kitchen tables. So much so that it’s the subject of popular shows such as Love It Or List It. What are the real considerations of “loving” your property vs “listing”?
Overview
Generally speaking, selling your home and buying a new one seems to be the more straightforward option. Renovations are time-consuming, stressful, and can represent a significant financial investment. However, if you are attached to your home, would have difficulty buying in the same neighborhood, or want a specific aesthetic for your home, then a reno might be right for you. So what are some of the pros and cons of selling vs relocating?
Benefits of Renovation
The benefits of a renovation are often about location. Homeowners may not want to leave a particular neighborhood, or may not want to leave for sentimental reasons. If you’re attached to your home, but can’t quite make it work for you, then a renovation may be an option.
The renovation considerations are typically centered around improving your living experience and your family’s quality of life. Common reasons to choose to renovate include:
- The ability to design a space to uniquely suit your needs and tastes.
- Living in a desirable neighborhood
- Proximity to amenities, work or school.
- A unique feature of the home, like a view, backyard, or layout.
- Desire to stay in the home long term and aren’t concerned about recouping costs
However, it’s rarely the better option from an economic standpoint. Homeowners hoping to recoup the costs of a renovation when they resale may be surprised to find that they are likely to recoup only 50-76% of the job cost of a major renovation. Additionally, renovations are a big commitment of not only money but also of time. You’ll also need to decide if you’ll live in your home through the renovation, or if you’ll have to factor in the cost of temporarily moving out.
What Are The Costs of Renovations in Southern California
Creating a budget for a home renovation can be hard. Every renovation is different, with unique challenges, family needs and potential surprises behind its walls.
Cost vs Value reports the following average starting costs for home remodeling in SoCal, though the cost can grow substantially depending on the finishes chosen.
- Midrange Bathroom Addition: starting at $60,000
- Midrange Bath Remodel: starting at $26,000
- Midrange Major Kitchen Remodel: starting at $83,000
- Midrange Master Suite Addition: starting at $353,000
The price of a gut renovation can run as high as $250,000 to $650,000 depending on the size of the home and the complexity of the project. The cost of renovations has been rising rapidly, with some materials seeing a 15%-25% price increase since 2021. The following changes can run up the bill for a renovation:
Removing walls
Modern, open-concept floor plans often require taking down walls which can prove challenging. It will most likely require engineering evaluations, rerouting electrical and plumbing, and refinishing floors and ceilings. Even some more conservative changes to layouts may involve moving walls, especially if you’re trying to increase the number of rooms.
Plumbing upgrades
Plumbing upgrades can often be complex and a big undertaking, especially when sewer lines pre-1960 or poly b pipe is involved. Often, there is already substantial water and corrosion damage leading to additional work that needs to be done. Drywall needs to be removed to access pipes, and sometimes the foundation needs to be dug up and repoured to address sewer and septic issues. This can not only add substantial cost but also time to an already lengthy process.
Electric upgrades
Electrical updates are especially prevalent for older homes which may not be wired for modern electrical needs. Design features like pot lights and smart homes require additional wiring. The rise of electric cars and at-home electric car chargers has also become a must-have for some people. Additionally, updates to building codes may have a significant impact on your project. You’ll likely need to update the electrical panel, which can run upwards of $3000 to accommodate.
Custom cabinetry
Homeowners often want the flexibility that comes with customization but will pay a premium. Custom cabinetry, including kitchens and built-ins, can cost double prefab options. With costs varying from $2,500 to $30,000 and more, the quality of your cabinets can really impact your bottom line. Kitchen finishing can also vary tremendously, and what suits your tastes may not translate well when you go to sell. This often means that homeowners have to choose between trends and personal aesthetics and timeless classics that will hold value.
Unforeseen issues
People always hope that renovations go to plan, but the truth is that unforeseen issues come up. Common issues include water damage, structural issues, faulty wiring, building code updates, unsafe building materials like asbestos and lead, and supply chain issues. These issues may not only make renovating your home harder but can also impact your ability to sell your home. If you’re selling a home that needs repairs, or you don’t have the resources to finish a renovation, then read our guide on selling a home in need of repair.
What Are The Benefits of Selling
For many, selling and buying a new home is a more practical solution. It allows you to have more flexibility, especially in terms of expanding space. It also can make financial sense if you’re looking at improving an older home, or if the home needs extensive updates to make it work for you and your family.
The benefits of selling include:
Improving Your Location
A renovation can’t make your commute shorter, or make the street you live on quieter. Moving to a more advantageous location, whether it’s in a better neighborhood, a lower cost of living area, or proximity to work/school can be an attractive reason to move.
Add Space
Sometimes you just can’t squeeze more space out of your home. Rearranging your home through moving walls can be complicated and costly, especially if plumbing is involved. Furthermore, adding rooms may not add value to your home, especially if the rooms are smaller. And while additions are a great solution for many, the reality is that some homes just don’t have the land to add an addition onto. Moving to a new home may be the only way for you to realistically increase your living space. This can also include moving to a different location with a larger inventory of larger houses and more outdoor space.
Avoid the Stress of Renos
Renovations are hugely stressful. They are not only a significant financial burden, but often with huge variations in costs. Couples going through renovations may also find that they have different priorities and tastes, and finding a compromise may be difficult. The extended timeline of a reno, all in which you’re either displaced or living in chaos can add to the stress. It can be so stressful in fact that 50% of people report that it’s had a significant stress on their marriage, with 12% reporting that they considered or pursued divorce during a reno.
Though moving can be stressful as well, it’s a much more straightforward process with far fewer unknowns.
Considerations of Selling Your Home
Though generally, it makes more economic sense to relocate, there are costs to consider when selling your home. This includes closing costs, real estate agent commissions, moving costs, and taxes.
The strength of the local housing market can determine whether it’s a good time to sell. These considerations include.
- Mortgage interest rates
- Time of year and availability in the market
- Average time to sell
- Whether it’s a buyer’s or seller’s market
The reason for considering a renovation may also make the home difficult to sell. Homes that need extensive updates, and repairs or have an undesirable layout are harder to sell. Even in a “hot” market, homes that don’t photograph well, or have issues may not sell well. This could prove additionally stressful if you find your dream home, but can’t find a buyer for your existing home.
If you’re looking for more control over the sale of your home, then selling to a cash buyer might be a great option for you. Haven Homebuyers will buy your home for cash, no matter the condition. We will operate on your timeline and choose your closing date, giving you the most flexibility to sell when you find your new home.
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