Should you stay or should you go?
Deciding whether you should renovate your current home or buy a new house isn’t easy.
It comes down to asking yourself three big questions, according to Drew and Jonathan Scott, the stars of HGTV’s “Property Brothers” and “Property Brothers: Forever Home.”
“Am I in the right location? Can this home make my life easier? Is there enough space for all of our family as it grows?” said Jonathan, a licensed contractor.
Cost is also a factor.
“There are memories,” said Drew, a real estate agent. “There’s heart in the home.
“There are reasons people love it,” he added. “But then when they think that, ‘Oh, this house just won’t work for me. I want to move.’
“There are so many things that we can change in their current house,” Drew said. “And it could be more cost-effective than trying to hunt for something that’s already done the way they want it.”
Home prices are rising, thanks to a shortage of homes for sale. The national median price for an existing home sold in November, the latest data available, was $271,300, according to the National Association of Realtors. It was the highest November reading since the association began tracking prices in 1999.
In fact, the normally quiet winter market is already perking up.
Yet renovations also aren’t cheap. For example, a minor, mid-range kitchen remodel costs an average of $22,507, and a major overhaul costs an average of $66,196, according to Remodeling Magazine. A mid-range bathroom addition costs $47,427 while a master suite addition is $130,986, the magazine said.
Renovating your current home
If you decide to stay put and renovate your current home, the No. 1 thing to do is be organized, Drew said.
“So many people, they just jump into wanting to renovate right away, or they start buying products to put in their house, but they haven’t organized,” he said.
“It’s like going grocery shopping when you’re hungry — it’s a bad idea,” Jonathan added. “You don’t want to just jump in and start renovating your house because you know that there’s a need.
“You’ve got to plan.”
The first thing you need to do is make sure the house is safe. That means that, if there are any structural issues or something such as asbestos, it can be taken care of before you get entrenched in the project.
It also means knowing when you have to hire a pro, even if you wanted to do the renovations yourself.
“Anything that’s outside your comfort zone — anything that requires permits or a licensed professional, those are things that you need to bring outside resources into,” Jonthan said.
Buying a new home
There are some things you just aren’t going to be able to change about your current house.
It may be that you need to send your child to a specific school district. The lot size or house size just may be too small, or it doesn’t have enough bedrooms to fit your growing family.
In that case, it may be time to pack up and move.
More from Invest in You:
Property Brothers: Avoid top home renovation mistakes
Many millennials say buying a home may finally be within reach
The best thing you can do for a financially strong 2020
Another thing to consider is how much money you’ll have to spend on a renovation to get what you want. It may be better to move, instead.
“There’s a capped value in every neighborhood for any house,” Drew said.
“So it’s good to have a real estate agent do an assessment of what the value would be after a renovation and then compare that to what it would be for a house that’s big enough for what you need in a different neighborhood that has more space.”
Also, if your renovation goes over the assessed value, you could be in trouble down the road.
“The easy rule of thumb is at any given point if you, in an emergency, had to sell the home, you want to make sure that you’re not upside down,” added Jonathan.
“So try and try to make sure that you’re always thinking [of] future resale value.”
SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox.
CHECK OUT: Here’s what kind of mortgage rate you’ll get depending on your credit score via Grow with Acorns+CNBC.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.