In Canada, the average house price is at an all-time high: about $500,000. As such, what once seemed like a given — home ownership — is now more challenging for the average young Canadian.
The flip side of the coin isn’t necessarily shinier. Those who do own their homes are faced with an interesting question these days: is it better to sell and move to get the features they want in their home or should a family renovate their current home?
There isn’t a hard and fast answer to this question because a lot depends on who you’re talking about. The goals of a young family are different than those of a couple approaching retirement. But asking these questions can help make that decision easier.
What are your goals?
This is possibly the hardest question. You need to sit down (preferably with a cup of coffee in hand) and think about what you want in life. Do you need to save for your kids’ education, are you saving for retirement or do you have plans to start your own business? These are all questions you need ask yourself. You need to determine if you can afford to move or renovate and if that cost, whatever it is, fits in with your other goals.
What do you want in your new home?
Are you looking for a more functional kitchen, nicer bathrooms or does your family need a whole new space? Can you move your growing kids to the basement apartment or do you need that monthly income? Determine what you need from your home and see if it’s more cost efficient to renovate or if it’s a smarter choice to buy a new house to save you from the stress of renovations.
Do you like where you live now?
What about the Smiths next door? What about the school your kids go to? Think about your current neighbourhood and decide if saying goodbye is even an option.
Do you have the money?
Talk to contractors to determine the price of your desired renovations and then add in some contingency money. Some experts say that it’s smart to have an extra 25 per cent in budget in case things go wrong or you end up catching a case of the “why nots." Take a look at home renovation shows you love to watch and all the drama that’s uncovered during the demolition process. You don’t want to be stuck in the same messy situation!
On the flip side, do you have the money to buy a new house? Chances are other houses need renovations too and that doesn’t even take into account the costs associated with moving, such as land transfer taxes and real estate fees. Get your calculator out to see if you have the money to renovate or move.
Is it a smart financial decision?
A short term investment in our homes in the form of renovations — even small ones — can pay massive dividends down the road. Some minor renovations can help make your current home the #dreamhome you’ve always wanted while increasing the value of your home, leaving you with more pocket cash when you eventually decide to sell. Heating and ventilation overhauls, a new floor and landscaping fixes are smaller renovations that increase equity. To that end, living in your current home will be all the more enjoyable.
Whether you choose to sell or renovate, you need to pay for that cost somehow.