When your living space begins to feel too cramped, homeowners are left with an age-old dilemma: expand the house or simply pack up and find a new. The decision is no simple task and there are so many factors to consider. Of course, much depends on your own personal feelings and circumstances, but from a financial perspective, the choices are slightly more black and white. Here are the pros and cons to help you decide between renovating and relocating.
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Expanding a home is often more cost-effective than moving for a variety of reasons, says Richard Roll, founder of the American Homeowners Association. “If you like your home and its location, and labor costs are low and good labor is relatively available, you can get the result you want without the uncertainties and transaction costs of refinancing, real estate commissions, and moving costs.”
Indeed, adding an extension is often significantly less expensive than purchasing a new home, and closing expenses alone can sometimes be higher than the cost of certain home renovations. Depending on the size of the project and the house, most renovations also have a high cost-value ratio. Much of the renovation costs will be recouped once the house is sold, according to a recent report by Remodeling Online.
Although it is the less-risky option, there are a few distinct difficulties associated with home extensions. It’s important to note that unless you’re building a purely vertical extension, you will probably be taking space away from some other area of your property, which can potentially affect its value. A larger home will also cost more to maintain, which means higher heating and electrical bills. Renovation can disrupt your daily life, as the constant noise and commotion can interrupt your sleep and increase stress levels. You and your family should be well prepared for the extra hassle before undertaking any major construction project.
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Relocating is often considered the riskier investment, yet it can sometimes yield the greatest results. Perhaps the most obvious advantage of moving is that it provides you and your family with an opportunity to start fresh in a new house and neighborhood.
If house prices are beginning to sag in your area or the local schools aren’t up to scratch, relocating will give you the opportunity to head for greener pastures. Although finding a new home can sometimes be a lengthy and traumatic process, the actual disruption caused to your daily life is minimal in comparison to renovation.
It goes without saying that moving is an expensive process. From closing fees and property taxes to transport costs and estate agent bills, the expenses can add up rapidly – and that’s before you even consider the price of a bigger house. For some, moving can also cause considerable upheaval to the family, particularly if you are moving to a new neighborhood or town.