Should you stay in your current home and move forward with a renovation or should you table those plans, put your home on the market and look for a more suitable home? That question is tougher to answer today, considering that the housing market is far different now than it was just a few short years ago.
Let’s take a look at some points for you to consider as you weigh the cost of renovating:
Cost of materials — Rising materials costs can convince you that a renovation isn’t worth the cost, as higher fuel prices affect everything including roofing materials, plastics, wiring, plumbing and more. If fuel prices drop quickly and material costs with it, then the price of materials may no longer be the factor that it is today.
Labor costs — One area where you may be pleasantly surprised is the cost of labor which has dropped as unemployment rises and the number of homes being renovated or built, falls. More contractors are competing for your business which means you stand to save money, perhaps enough to offset the costs of more expensive materials.
Financing costs — Most homeowners who are contemplating a renovation project will borrow the money, either through refinancing a current mortgage or taking out a home equity loan or an equity line of credit. Rates on all financing options are quite low, below 5 percent in many cases, making it easier for homeowners with good credit to secure a loan at a favorable rate.
Now let’s explore the costs associated with moving to a new home:
Tough market — No matter how you look at it, the housing market is in a tough place which means that this is clearly a buyer’s market. You might have to let your home go for less to sell it, but you may be able to pick up a “buy” on the other side, offsetting your losses accordingly. Don’t forget closing costs!
Moving expenses — It costs money to move including closing costs as you sell your home, moving costs as you make your transition and other expenditures related to selling a home and moving in. Renovating costs money too as you’ll pay for closing costs on your loan which will cost you less than selling a home and picking up a new one.
Added expenses — If you’re moving to enjoy more room, then you’ll most likely see some of your expenses increase including property taxes and utilities. These costs can’t always be pinpointed, but should be part of your budget planning as you explore your options.
Of course, you aren’t forced to move or to renovate now. You could wait, hoping for more favorable market conditions, but delaying could mean that you’ll miss the opportunity sitting before you right now.
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