One way to ensure you keep your remodeling job in touch with reality is to consult the annual list published by
Remodeling magazine and the National Association of Realtors. The list evaluates how much return you can expect from a given home improvement. Some jobs, such as regular maintenance, better siding and minor bathroom renovations, for instance, return more than 80 cents in value for every dollar spent. Others, such as adding a sunroom or a pool, return less than 60 cents on the dollar, or worse. "Anything beyond what you will get back through appreciation is a true expense," Fritschen says.
The difference is a question of land value vs. structure value. "Land appreciates the most, the house not as much," Fritschen says. So, staying on your existing property and improving the home itself could mean a substantial tax savings compared with moving to a new home where the taxable value could increase. A decision to remodel or move comes down partly to emotions and partly to finances. "One of the first things you should ask yourself is if you really like the location your house is in right now," Fritschen says. Consider your neighborhood, schools and whether your home is average or below cost for neighborhood. "If you like all of those aspects, then it is likely you can remodel and keep the things you like and improve on the things you might not like so much -- size, amenities, things like that," he says. Even if you are in love with an area and you would certainly get your money back, Glink says it might not make sense for some people to commit to a potentially life-changing remodel. "You really need to be honest with yourself," she says. "Do you want to go through the mess and headache of a remodel? You have to realize, things will go wrong. It will cost more than you thought. It will be a nightmare. And then when it is done, it will be beautiful." When to move
No matter the increase in value a home renovation can deliver, there are some things you just can't renovate away. "Look at land size, location, schools, neighborhoods filled with ugly houses and no trees -- those are things you can't change readily," Fritschen says. If those are the issues you want remedied, then a move might make the most sense. "If you've always dreamed about living at the top of a hill, there is nothing you can do to change your flat street," Fritschen says.
Hating your neighborhood might not be the only reason to go house hunting. "Say your house was built in the 1950s and they used lead paint. Does your state law require you to strip the paint? Do you have to move out while the work is ongoing? What if you have asbestos insulation? These are things you might not want to touch," says Glink. Moving isn't all that much easier than remodeling, but it is quicker, says Fritschen. "Remember, you have to pack up. You have to unpack," he says. "Selling a home is also invasive. But we have all moved before, so we are more comfortable with that transaction. You just need to weigh what you would hate less." |