It is all too common when a homeowner faces the perplexing and complicated dilemma of selling their existing home and buying a new home or remaining in the existing home and renovating the home to fit their current and future needs. In some cases this decision can be readily made due to the prior established long term family goals. But in many additional situations the homeowners must sort through and deliberate over the litany of matters that make this dilemma a difficult issue to simplify.
This entire personal exploration begins with the question, what are your families motives and goals in your housing needs. This dilemma can usually be classified into tangible and intangible factors. The intangible factors are the tough emotional based elements that require lingering consideration. The second classification can be identified as tangible factors. Tangible factors are problems that can be measured and quantified. These items as they relate to our dilemma resolution are commonly numerical or mathematic based elements. Lets discuss the many factors that lead to making a comfortable decision to sell or undertake a home renovation.
Lifestyle – Your home reflects your lifestyle. You entertain in your home, you raise your family and you spend your quality time personally refueling in your home. Each member of the family enjoys their own lifestyle in your home.
Lifestyle issues are not difficult to remedy. There are many cost effective strategies that can resolve an owners needs. If the home requires updating or a need for more space, these challenges can be met if this is a relevant concern.
Location & Community- The location and neighborhood of your home is often a significant factor in your dilemma deliberation. This is even a greater challenge if children’s schools are part of the evaluation. Moving to a new part of your city for the schools can be the driving factor with younger families. The flip side of this is when a family is considering changing schools as a consequence of buying a new home. These are difficult prevailing factors and should be carefully measured in your cost benefit assessment. Changing location has become a major determining factor for the aging baby boomer generation. AARP reports that 82% of aging boomers prefer to age in place. Although they realize that their current home will need modifications for their personal aging and also addressing the increasing maintenance problems as the home ages with them. These matters require a general contractor that will act as a trusted adviser in discussing the homes required home improvement and associated budget that comes with them.
Updating or Structural Requirements – The average age of a single family home in metro Houston is 30 years old. A home this age will require many major home improvement products replaced if not previously addressed. Products like roof shingles, mechanical systems and kitchen appliances represent a few of the more expensive home components that need to be evaluated as future investments.
Other major concerns in Houston would be if the home has experienced any structural settlement. The soil conditions in Houston are highly plastic and commonly lead to foundation failure. Foundation failure generally leads to the homes walls and ceiling cracking or shifting. These are key factors in assessing the viability of investing additional funds in home improvement that is experiencing this type of distress.
Lot Value vs Home Value – In the metro area of Houston many of the older homes are experiencing an economic renaissance. This is a result of a growing demand the past decade for homes in the finer neighborhoods in metro Houston. Since typically there is little to no available building site inventory for new home construction, price pressures cause the land value to outpace the value of the existing improvements.
These price demand pressures result in homes 55 – 70 year of age being torn down for the value of their land. The economics of this renaissance places larger lots in high demand neighborhoods at a price premium. This new economic reality creates another challenging matter of the sell-renovate dilemma.
Homes in the age range of 35-55 typically require a great deal of updating. So the question becomes, should the owner make the necessary investment commitment to home renovations or live in the home and sell for land value in the future. Careful financial research and vetting are required to make this assessment. That often requires a financial feasibility to be conducted by a seasoned pro with market price information and construction cost facts.
Financial Feasibility – The financial feasibility consist of a comprehensive analysis of the relevant financial factors that require evaluation in making a clear intelligent decision to conduct a home renovation or sell your existing home. These financial factors include the compiling and assessment of comparable home values, land market values and realistic construction cost estimates.
These financial factors are compiled to determine the future assessment of your homes market value before and after construction improvements are completed. Using the last five year history of the local appraisal district’s market valuation increases can be used to project a reasonable estimate of the future value of the improved homes future market value. This can then be compared to the sales assessment analysis.
The summation of this data is designed to provide the owner with a realistic financial assessment that aids in determining if the projected renovations make financial sense. The results of this analysis can then be compared to the results of the projected benefits of a sales analysis. This comparison will provide you the needed financial insights required to measure the tangible concerns associated with a sell or renovate dilemma.
As discussed, there are many moving parts to the renovate or buy scenario. This is a matter that a qualified general contractor can readable develop for you during your evaluation period. It is both a powerful decision making tool and pre development mechanism for preparing for a complete lifestyle assessment.