The first question in the remodeling decision process arguably should be "should we remodel or should we move?" The answer to that question isn't necessarily obvious and is going to require some research and a little soul-searching. Consider the following questions to help you make this decision.
Do you like the location of your home?
Is your home convenient to work, schools and the activities you participate in? Are you happy with your school system? Are you happy with your neighborhood? What about your lot? Is it large enough, particularly if you are considering an addition? The golden rule of real estate is location, location, location---if you have it, then choosing to remodel will probably be a wise investment.
Do you like the style and construction of your present home?
Although a professional architect can dramatically change the appearance of a home, in most cases, you should like the style and character of your home in order to justify a large remodeling project. If you are unhappy with the construction of your present home, or are considering a complete change in style, a professional architect can help you determine how realistic your remodeling goals are and if significant changes can be made to your present home within a reasonable budget.
Is remodeling your present home more cost-effective than moving?
What are the current prices of homes in the neighborhood where you want to live? If you factor in what you originally paid for your current home plus an estimate of the potential renovation cost, are the new homes more expensive than the cost of remodeling your present home? What about the hassle and cost of moving? Check out the cost of moving section to find out just how expensive moving can be.
What is the current resale value of your home in its present condition?
Say you purchased your home for $200,000 and it has increased in value to $350,000. If you spent $150,000 for a remodeling project, the worst-case scenario in the present housing market is that you would break even on the sale of your home. Most likely, especially if your renovation is well designed and quality built, you would be able to re-sell your remodeled home for a higher price because of your remodeling investment.
Will remodeling increase the resale value of your home?
This depends on a number of factors: the quality of the design, the quality of the construction, the type of remodel, and the popularity of where you live. Generally kitchen and bath renovations and well-planned additions provide a good return on investment.
Keep in mind, however, that many studies have shown that poorly designed and executed projects rarely pay off.
Check out the resources section for more information on the value of remodeling.
Is this a Good Time to Remodel?
The first thing to think about is how long you plan on staying in your house. Generally speaking, the longer you plan on staying in your home, the sooner you should consider your project because you'll be able to enjoy the improvements longer and the longer time period also tends to increase the payback on your investment.
Another key thing to consider is your financial situation. Have you saved enough to pay for the project? Are your savings the right type of savings, meaning are your savings liquid and easy to get at or do you have to sell some other assets, like real estate, which may take some time to convert to cash? Have you looked into financing options? There are many ways to finance a remodeling project, some of which are outlined in our Financing section.
Do you have the time and energy to devote to a remodeling project? Chances are you will be visiting product showrooms and websites in order to select products, as well as meeting regularly with an architect and construction team. Will you be able to commit the time and energy to give your project the attention it will need to do it right?
An industry specific issue worth noting is the fact that construction costs, particularly construction labor costs, are expected to rise more than inflation because the shortage of skilled construction labor has driven construction labor costs higher, with no end in sight per industry experts. Consequently, the cost of doing a project, in relative terms, will probably be more expensive the farther in the future you do it.
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