The question of whether to build a new home or remodel your current home takes on some added dimensions today, because the costs of materials and transport, labor, and the availability of skilled craftspeople have changed remarkably in just the past two years. Let’s have a look at the numerous factors that enter this decision, because the decision is as unique as your own vision of home.
Motive is the Biggest Change
The motives for making your enjoyment of home a unique experience are, in fact, a greater difference today than even the more obvious factors of cost, time, and availability. Beginning in 2020, millions of homeowners and apartment dwellers suddenly experienced home as an all-encompassing environment, and for most of us this was a first. When health precautions prompted work-from-home policies – which are still evolving – and when even grocery shopping no longer was a spur-of-the-moment, anytime activity, many of us saw home in a new light.
What we saw when home became our entire world was not always as satisfying as it had been before. We became less tolerant of shortcomings and simply making do. We lost patience with waiting on our dream home. The experience drove millions into the homebuying market, prompting sales prices to soar. For some, this was an incentive to invest further in improving their home, more confident than ever of getting their value out of it when the time came to sell. For others, this was a goad to grab that unexpected price and roll it into a new home that lived up closer to their ideal vision.
The passions behind this homebuying market may be a greater factor in deciding whether to build or remodel than cost, timing, or availability. And yet, difficult to quantify, we might fail to consider them, if not for this reminder.
The Cost Factor
A puzzling rule of thumb was that building a new home from scratch would cost about 20% more than remodeling. How anyone could make this call is beyond us because it is an apples-and oranges comparison. The blunt conclusion fails to factor the scope of the remodeling, the size and location of the home, and so forth.
Another rule of thumb which may be ripe for reassessment is that we used to recommend spending less on a kitchen or bath remodel if you planned to continue living in the home for less than five years. In former real estate markets, the payoff was likely to support a more major renovation if your sales horizon was more than five years out. The real estate market of the past two years has rendered this five-year benchmark far less meaningful, as we have seen rapid increases in home value beyond the cost of renovation in remarkably short periods of time.
More relevant might be to consider that building and remodeling are subject to the same escalation of building materials, high demand for labor, and scarcity of skills for achieving the desired result. These are the factors that make the two conclusions similar. So where do we look for the difference?
Personal Value and ROI
Because the scope of a remodel – whether a room addition, a new kitchen or bath, or an enhancement to porch or patio – is rarely as all-encompassing as building a new home, it may be useful to observe that Return on Investment is a more prominent consideration when choosing to remodel. Folks usually consider which added features or capacities yield the greatest increase in selling price.
When the decision is to build, on the other hand, then it is usually driven to a greater extent by the personal value of enjoyment. What would we like to have and hold and experience in the here and now, saving the natural resale results for later? This is also the conclusion when the desired improvements encounter structural limitations, such as ceiling height, truss locations, and beam lengths.
This is a discussion we have been privileged to help our clients explore to their greatest ultimate satisfaction. Because we have been fortunate to travel this path so many times in support of our clients, and because homeowners themselves rarely consider their experience to be sufficient, much less all-encompassing, it is a role we are happy to accept. The best answer to the question of whether to build or to remodel is to begin by talking with someone who has been there before, and the more times the better.
It can be a fascinating and rewarding conversation. Let’s get together and talk it over.