To buy or to renovate? This is one of the most common dilemmas that many homeowners face. Specifically, many homeowners wonder if it is cheaper to buy a new home or remodel their existing one. Unfortunately, this question cannot be answered with a simple yes or no because both options have benefits, challenges, and costs. If you are a homeowner besieged with this dilemma, a general contractor may tell you that the right decision depends on a variety of factors. You have to assess your lifestyle, budget, location, and long-term goals.
A breakdown of the key considerations may help you decide which route will be more affordable (and practical) for you.
Is It Cheaper to Buy a New Home or Remodel?
The Cost of Buying a New Home
The purchase of a new home is a major financial move. The cost does not only involve the list price. There are various other additional expenses you must consider.
- Down payment, which is typically 10-20% of the home price
- Closing costs
- Real estate agent fees
- Moving costs
- Property taxes, which often depend on the location
- Homeowners Insurance
- Upgrades or renovations to make the space your own
Today’s market is making it harder for buyers to find affordable options that meet their needs because of the continued rise in prices in a lot of areas. In addition, monthly mortgage payments may be increased by higher interest rates.
Yes, a new home may offer you a fresh, clean start and more modern features, but considering the whole financial picture is also essential.
The Cost of Remodeling Your Existing Home
While a new home may provide you with a fresh start, remodeling your home can provide you with modern features depending on your design, and give you your intended space changes without completely uprooting you from your life. Remodeling costs can vary depending on how big or major you want your remodeling project to be.
Remodeling costs may seem big, especially if you are remodeling your whole house and upgrading your pieces of furniture and appliances to match your new design, but a remodel can save you from the hassle of moving and from uprooting your life and from giving up on your neighborhood, schools, and friends.
Hidden Costs to Watch Out For
This may come as a surprise to many, but both options may involve hidden costs that can catch homeowners off guard. Consider the following so these costs do not catch you off guard.
With buying, you face costs related to inspections, repairs, or bringing the home up to code if you are not the first owner. If you are moving to a completely different location, your commute will change. You may also face changes to your utility rates and overall cost of living.
With remodeling, structural issues found during the renovation may lead to unexpected expenses. You may also encounter permit fees and changes in material costs. Working with a reputable design and build firm can help you avoid these surprise costs and give you a more realistic view of the scope of work and timeline from the very beginning.
Which Option Adds More Value?
When thinking about long-term benefits, a newly purchased home may appreciate over time, especially in a hot real estate market. However, remodeling may also increase the value of your present home, especially when you give more attention to high-impact areas like the kitchen, bathroom, and front entrance.
The 2023 Cost Vs. Value report states that mid-range kitchen remodels can recoup up to 71% of their cost, while installing a new garage door may help you recover more than 90% of its cost when it is time to sell.
Which Option Is Cheaper?
So, in a straight comparison, is buying new or remodeling cheaper? In many cases, remodeling is more affordable. It not only saves you moving-related costs, but it can also boost your home resale value and allow you to stay in the neighborhood where you and your family have already set down roots. Working with a reputable build and design company that has a wealth of experience in home renovations will help you make wise decisions and keep you from making costly mistakes.
However, if your present home’s layout no longer works for you and your growing family, or if there are major structural issues that are extremely costly to address, then buying a new home may be the smarter option.
Let Us Help You Decide
The choice between the two options boils down to your budget, personal goals, and timeline. If you love your location and you just want to refresh the look of your home, remodeling may be a better option. However, if you want a more dramatic change or if remodeling will cost more than the value of your home in the long run, then purchasing a new home is a better investment.
If you find yourself struggling between the two options, consult with our licensed design and build company. Call us today so we can help you explore your options, give you accurate estimates, and guide you in making a decision that is best for you and your family.