As we progress through 2023, homeowners in Northern Colorado are carefully considering the value of home improvement projects. With the rapidly developing economic landscape, the evolving housing market, and the importance of smart budgeting to counteract rising living costs, there has never been a more important time to weigh the worth of these investments against purchasing a new home outright.
There is much to consider, and we understand how such a decision can be stressful. This article serves as a helping hand in deciding whether to invest in a new home vs. remodeling with special consideration of factors such as budget, market trends, and overall value of home improvements in 2023.
The biggest factor for most people deciding between buying a new home vs. remodeling is the financial and budget viability.
Let’s consider the purchase of a new home first. According to Realtor.com, the median listing home price in Fort Collins, one of the most popular towns in Northern Colorado, was $590,000 as of April 2023. Even if you were to sell your previous home before purchasing a new one, this is an investment of potentially several hundred thousand dollars.
Furthermore, there are several more hidden costs likely to be incurred during the home-buying process, including:
Now, let’s consider an investment in remodeling. Depending on the scale of the remodeling project, whether it’s just a room or two or it’s the entire home, costs will vary significantly. With a remodel, however, most homeowners decide to start projects one room at a time. The benefit of this is the flexibility in matching the project to your budget. In this way, remodeling is far more financially viable: it allows you to stay at a scale that’s within your means.
In order to make an informed decision whether to buy a new home or invest in a remodel, it’s critical to be in the know about Northern Colorado’s housing market. All across the United States, interest rates are incredibly high (as of writing this piece — October 2023). Interest rates drive the cost of borrowing money from banks. Therefore, high interest rates mean more expensive mortgages.
In most situations, high interest rates lead to a decrease in home prices. This is to encourage the purchase of homes even when borrowing costs are high. However, even though interest rates have been growing across the country, homes in Northern Colorado have only skyrocketed over the last five years.
These conditions (high interest rates and high home prices) lead to a very obvious situation where buying a new home is not financially viable, especially in comparison to the alternative of remodeling. On the other hand, remodeling actually allows you to take advantage of these conditions!
Remodeling your home will practically always increase the value of your home. This favorable market condition presents an opportunity for homeowners to maximize their returns on investment in home improvements. Upgrading certain parts of a property can make it more appealing to potential buyers. This includes remodeling kitchens or bathrooms or adding extra living space. Doing so can potentially result in higher selling prices and, thus, an opportunity for you to capitalize on the situation!
An often overlooked variable is time. Many would argue that time is the most valuable commodity, so it’s important to consider how your time is affected in deciding between purchasing a new home vs. remodeling.
Buying a new home tends to take more time than people expect. Between hunting for homes, packing your entire life up into boxes, moving to a new location, unpacking once more, and settling into a new location, the decision to purchase a new home is as costly on your time as it is on your bank account.
Remodeling does cause some inconveniences with work happening at your home for the duration of the project, but it does not demand much of your time. It takes time if you were to do the remodeling yourself, but if you hire professional services, the time cost is close to nothing.
A final consideration between buying a new home vs. remodeling is the potential for personalization. New homes aren’t guaranteed to match your preferred taste or style, but that’s exactly the benefit of a remodel.
Also, as mentioned previously in this article, remodels can be scaled to the size that fits your budget, which is much more personalized than having to purchase a new home at a minimum of several hundred thousand dollars.
When it comes to determining between a new home purchase vs. remodeling in 2023, remodeling is far more financially viable. Between the current market conditions, time requirements, and other hidden costs, remodeling allows you to adapt your project to your budget and personalize it to your needs. On top of it all, remodeling will contribute toward your already growing equity, leading to a situation where you can sell your home for a much higher price!
If you have questions about the remodeling process or are considering a project of your own, contact the experts at Mighty Hand Construction today.