Here in Northern Virginia, the cost of housing and the ongoing sellers’ market often creates a dilemma for homeowners: should you move, or should you stay put and remodel?
There are a lot of factors that go into answering this question, and the answer won’t be the same for everyone. Factors like costs of remodeling, how long you will stay in the home after the remodel, the needs you may have that can’t be met by remodeling, the value of other homes in your community, etc., are all part of the equation.
Make Lists!
First, list all the things you would look for in your ideal new home: Gourmet kitchen, get closer to family, one level vs multi-level, larger yard, better schools, shorter commute, etc.
Next list out the things you love about your current home – maybe you love the rose garden you planted or the built-in bookcases and china cabinet or you love your schools. Then list all the things you would need to change in the home for it to continue to work for you (it’s OK if this list looks similar to the first list you created).
Take note of things that you would want in your new home that you already have in your current home. And also take note of the things that you could change in your home to make it more like your ideal home. Finally, circle all the things that you want in your new home that you absolutely cannot get in your current home – this could be due to space limitations, community HOA rules, budget, location, or structural limitations.
To complete this analysis, prioritize those things that you can’t get in your current home. If it helps, divide them into categories of “Must Have”, “Like to Have”, and “Can Live Without.” If your “Must Have” column gets really long, then remodeling your current home may not make a ton of sense, since it won’t move you any closer to achieving the things on your “Must Have” list.
Often these “Must Haves” that can’t be achieved with remodeling fall along the lines of location/proximity. For instance:
- Quality of school
- Walkability scores
- Proximity to family/friends
- Community amenities/features
- Commute time, public transportation
- Traffic – within your community and in your commute
- Access to groceries and shopping, restaurants, recreation, etc.
Many of the items listed above have nothing at all to do with the structure of your home, but the location of it. You can’t change that, no matter how much you sink into remodeling. But if you LOVE your location, and remodeling makes economic sense given the other homes in your community and property values, then remodeling might be a good option.
You may be able to stop after this initial analysis, because you have already decided that a move is your best bet. If a remodel is still in the running, then it’s time to look at the cost vs value considerations.
Costs vs Value
This is where the analysis gets a little more complicated. For instance, you need to think not only about what your remodeling projects will cost, but you also need to think about how your home will stack up against the other homes in the community once all the updates are complete. If you live in a community where most of the homes are going for $500-600K, and your remodeling will put the value of your home around $750K, then you may set yourself up for having the most expensive house in the neighborhood. “Over-improving” a home is never a good idea, and almost always results in the homeowners selling the home for less than what they thought they would.
You also want to make sure you analyze the type of remodeling you want to do. If your projects don’t results in any layout changes to the existing home (for instance, you want new cabinets, counter tops and appliance, but you aren’t moving any walls to expand the kitchen), then those are relatively cost effective changes. You will get back probably 70% of what you spend in increased home value. However, if you spend $100k to put on a room addition that adds a few hundred square feet to your home, then you may not get as much of that back in increased home value. The costs go up considerably when you need to move load bearing walls or if you will need to relocate HVAC and plumbing.
You can use the 2018 Cost vs Value Report to help you estimate the cost of your remodeling projects. This report allows you to look at the expected ROI vs costs for common home projects based your location. Since every project and home is unique, don’t consider this an actual quote on your project, but you can see what others have spent on similar projects in your area and the resulting impact to their home values.
For comparison purposes, take a look at the homes in the market in the areas you would want to move to that have the features you want. You may find that you’ll spend far less to just move to a house that already has an updated kitchen or in-laws quarters, than it is to add them to your current home.
How Long Do You Plan to Stay in the Home?
If you foresee a move in your future: a potential job transfer, moving to be closer to aging parents, empty-nesting, expanding family, etc., then remodeling may not be as cost effective for you. Ideally, to get the best ROI on a remodel, you should be staying in the home 5 years or more. Rising home values will help you recoup more of the cost of your expansion and design changes the longer you stay. If you think you may move anyway in less than 5 years, then you may want to ratchet down your wish list. You can still make some strategic improvements that will help your home sell in the future (and more livable for you), without spending a fortune on dramatic changes.
We can help you determine which home remodeling projects would make the most sense given the community in which you live and the types of features buyers are currently looking for. Whether you are looking to buy or sell a home in Northern Virginia, we are always here to help with all your real estate needs! If you are unsure of your home’s value or if you are thinking about buying or selling, contact Jason at 703-298-7037 or Jason@JasonAndBonnie.com.
