Should I Move or Improve My Home?
Love it (and willing to put in the work) or list it? Here are some things to consider.
Chances are, you’ve binge-watched one of the popular home improvement shows on television where homeowners grapple with the question of whether they should move or improve their existing home. It’s a decision that is typically unavoidable as your home ages and your family circumstances change.
While we may not be able to get you on T.V., we can offer some helpful pointers (and solutions for whatever decision you make). Whether your family has grown, your home no longer fits your lifestyle, or whatever the case may be, here are some things to consider in order to arrive at a decision that is right for you and your family.
The Current Real Estate Market.
Do all the stories about homes selling for far above asking price, sometimes within hours of hitting the market, have you leaning toward selling your home?
While it appears to be a seller’s market right now (and the perfect time to put your home up for sale), remember you’ll also need to find a new place to live. According to Realtor.com, the current supply of homes on the market is at an all-time low, the likes of which hasn’t been seen in more than two decades.
At the same time, demand for homes is up, as many millennials are entering their peak homebuying years and mortgage rates are still at record lows. Naturally, when demand exceeds supply, prices will go up. Let’s take a look at some of the current trends driving this market shared by GAAR (Greater Albuquerque Association of Realtors):
- Median detached home price rose 18.9 percent to $315,000 compared to December 2020.
- Average detached home price increased 16.4 percent to $364,271 compared to December 2020.
- Overall inventory of detached homes for sale decreased 46.7 percent to 592 December 2020.
Furthermore, the fear of missing out could prove to be strong motivation for potential home buyers to enter the market quickly with buzz about mortgage rates rising. The Federal Reserve has signaled an end to ultra-low rates, which observers expect to start climbing as soon as March. While rates will still be at historic lows, they will be well above what buyers have grown accustomed to in recent years. All of this together could spark a buying spree during the spring homebuying season, further limiting inventory, increasing bidding wars, etc.
Clearly, it is a seller’s market.
Emotional Ties.
A home is so much more than just a roof, four walls and the stuff inside – after all, it may be the first home you and your spouse owned together or where you watched your children take their first steps. It is undeniable that the memories created in a home makes us develop an emotional attachment to our homes, so this decision shouldn’t be taken lightly.
In addition to your home, you’ll want to consider your connection to your neighborhood and the people in it. Do you have a good relationship with your neighbors? Can you rely on them in case of an emergency or to watch your home while you are away? Remember, you can change your home, you can’t change your neighbors or the neighborhood.
The Price Tag.
There’s no doubt about it – remodeling is expensive. Then again, so is moving. But just how expensive is expensive in these two cases? Let’s take a look:
Renovation Costs:
According to Home Advisor, the average U.S. home renovation costs $46,788. The typical range is between $18,372 – $77,016. Before you start renovating, remember to get multiple quotes and bids while carefully doing your research. And while this may not be a deciding factor for you, keep in mind that not all home renovations will add value to your home.
Moving Costs:
Sometimes you just need a fresh start and upgrading your home simply will not cut it. If this is the case, moving to a new home could be exactly what you and your family need!
Several costs go along with selling a home that you will need to keep in mind. In general, it costs around 15% of a home’s sale price to sell it. Several potential costs go along with selling your home. These include but are not limited to:
- Agent commission, 6% of the sale price.
- Home preparations and minor repairs $500-$5,000.
- Potential Major Repairs, $20,000 - $50,000. Some homes may not need this, but many older homes require significant work to meet housing and safety codes before they can be sold.
- Title Insurance, $2,000 - $4,000.
The Cost of Buying:
- Remodeling expenses for home buyers cost on average $8,000.
- Closing costs vary between 3%-6% of the mortgage.
- Home appraisals and title insurance range from $500 - $2,000.
- Holding two overlapping mortgages can cost around $0 - $3,000, depends on how long the overlap lasts.
How Rio Grande Credit Union Can Help.
The decision to move or improve can be challenging for a family to make, and they both have their own set of pros and cons. Whether you decide to remodel or move, Rio Grande Credit Union can help. Talk to us about pre-qualifying for a mortgage so you know how much house you can afford. This will also send the message to a seller that you are a serious buyer should you choose to move. Or use the equity in your home to pay for the renovations you need. Give us a call at 505.262.1401 or visit us online at RioGrandeCU.org.