Market Matters: How do I decide whether to remodel or buy a new place?

Illustration by Muti

Ken Parchman, president of the Cincinnati Area Board of Realtors, suggests “looking at the market value of the home before you renovate,” then estimating what it would be after. David Gunn, head of the mortgage department at Fifth Third Bank, takes it a step further, suggesting homeowners have a professional appraisal done first, especially if they’re going to finance the project with a home equity loan. Although a renovation could “be a less expensive option than buying a new home,” says Gunn, “a lot depends on how long you think you’re going to be there.”

“We tell people: ‘The day we’re done you can expect about 50 percent back on your money,’” says Alan Hendy, owner of Neal’s Design & Remodel. “Every year that you stay you get a little more added to that total.”

If the finances make sense there are other important aspects to consider: your home’s age, how outdated it is, how much you appreciate the location (walkability, sense of community, and commutes all factor in), and whether or not you will end up “over-improving the house for the neighborhood you’re in,” says Sibcy Cline’s Betsy Kiley. If you hesitate on “more of those than not,” she adds, “transforming could be a mistake.”

Perhaps the best tool out there for helping people decide, says Hendy, is the Cost vs. Value Report, online from Remodeling Magazine. “They do a huge survey every year, look at window replacement, roofs, garage additions, bedroom additions—35 different kinds of projects—[and] they look at the average cost of that project in Cincinnati and compare that to what the resale value is.”

Facebook Comments