Should You Sell Your House and Buy Another One, or Stay and Renovate the Current One?

June 3, 2024

Buying

Should You Sell Your House and Buy Another One, or Stay and Renovate the Current One?

Selling your house and buying another isn’t a no-brainer decision for many people right now. For instance:

  • If you have an interest rate on your current mortgage that’s lower than the current rates, you might question whether it makes sense to give up such a low rate for a higher one.
  • In addition, the prices of houses are still at all-time highs in many areas, which could make you feel like you’d be overpaying for a new home, even though you could get a premium for your current one.
  • And last, but not least, there is a shortage of houses for sale in many areas, which might make it difficult for you to even find a suitable option, and even if you do, you might face fierce competition from other buyers.

Those are all legitimate concerns worth taking into consideration, if you’ve been thinking about selling your house and buying another one.

Which could lead you to considering just staying put in your current house, and doing some improvements to it instead, using some of the equity you’ve likely built up in your home in the past few years.

That’s not a bad decision… if you truly plan on staying put for many years to come.

What’s Causing You to Think About Moving Deep Down Inside?

People sell their house and buy a different one for many different reasons. Some of them can be satisfied by simply keeping the current home and doing renovations or additions, like upgrading to a nicer, more updated home, or increasing the amount of living space you have, for example.

But there are many things you can’t solve without moving to a different house, such as:

  • If you need to relocate due to your career, or for a better commute.
  • Downsizing your current home by making it smaller wouldn’t be impossible, but it wouldn’t make much sense.
  • There’s no law saying you can’t live with your ex-spouse if you get divorced, but it’s usually not ideal.
  • If you want schools that are a better fit for your children, moving to a district that has programs they would benefit from is easier than getting the current schools to change quickly enough for your children to benefit.
  • Property taxes tend to go up over time, not down, so if you want lower property taxes, you need to move to an area that has lower taxes.
  • If you live on a main road or near train tracks, for example, you can’t change that without moving.

If selling your house has been on your mind, there’s something that’s been driving those thoughts. Think long and hard about what the reasons are deep down inside, and whether they’ll creep back up in the future if you decide to stay and renovate your house.

Even if you improve your current house, there are a lot of things that you cannot change; you could find yourself still wanting to move in the near future anyway, after having invested money you may or may not get back when you do eventually sell.

So, if you’re planning on staying in your current house due to the current market conditions, you should think carefully about how long you will actually stay in your current house, and what renovations you plan to do before you spend any money on them.

Think Twice Before Doing Any Renovations to Your Current House

If you decide to do renovations or home improvements to your house, rather than sell it and buy another one, you might presume that anything you do will raise the value, which will only end up benefiting you when you do decide to sell it in the future.

Well, the good news is that almost any improvement you make will increase the value of your house! But the not-so-great news is that the amount your home goes up in value probably won’t be as much as you even spent on any particular project.

In fact, as CNBC recently reported, according to the 2024 Cost vs. Value Report, only three home improvement projects produce a positive return-on-investment. The current projects that will net you the most profit when you sell your house are:

  • Replacing your garage door. That will produce an average profit of $4,238.
  • Replacing your front door with a new steel door. Doing this results in an average profit of $2,075.
  • Replace your siding with a stone veneer. This will add $6,634 to your net profit.

Unfortunately, none of those are likely on the top of your list of things you’d choose to do to your home to make it any better or more enjoyable to live in. Every other renovation you might choose to do to your home may very well increase the value of your home, but it won’t even improve the value by as much as it cost to do the project.

So if you’re envisioning major kitchen and bath renovations, or an entire addition to your home, don’t plan on those improvements producing a positive return on your investment when you sell.

If you plan on staying in your current house for years to come, it really doesn’t matter if you can afford the projects and you will get more enjoyment living in the home.

But you might want to avoid doing any major renovations, if you think that there’s even a slight chance you’ll still have the urge to move when the current market conditions ease up, and there are lower interest rates and more homes on the market to choose from.

Before you decide which route to choose, consider asking your local real estate agent for their insights and advice. While those home improvement statistics are generally true, they may vary in your local area and price range. An experienced agent can help you make an educated decision on what to do, given the current market and your personal situation.

The Takeaway:

Thinking about selling your house and buying a new one? It’s not an easy decision these days. Low interest rates on your current mortgage, high home prices, and a housing shortage might make you want to stay put and renovate instead. But before you commit to renovations, consider why you want to move. Some reasons, like needing more space or better schools, can’t be fixed by staying.

Remember, not all home improvements pay off. Replacing your garage door, front door, or siding are the only projects likely to give you a profit when you sell. Big renovations might not recoup their costs. So, if there’s any chance you’ll still want to move when market conditions improve, think twice before diving into major projects. Consulting a local real estate agent can help you make a smart decision based on current trends and your situation.


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