The concept of whether it makes more sense to refresh your home or relocate has come up a lot recently due to the hikes in mortgage rates. While not as high as they were at the peak in 1981 at 18.45%, they are significantly higher than they were in 2020-2021. For the last few years we have been able to secure mortgages and refinance existing mortgages with low rates, but today’s rates make the cost of money significantly higher. Which means you get less. With everyone working from home either some or all of the time, families need more space, more functionality, more walkabikity in neighborhoods – not less.
There’s also the question of housing prices and supply issues. One would think with demand going down, values would go down, but because of the lack in supply the housing values are not estimated to drop as much as we would like.
For many households, the above rationale is why they are choosing to stay in place and refresh. I’ll also take a moment to pause here and make sure we’re on the same page about some glossary terms, at least according to my dictionary. By “Refresh” I mean: paint, wall treatments, furniture layout, new furniture, repurposing the use of a room. A “Remodel” is tearing down or building walls, gutting kitchens,adding mud rooms…that next level work, and next level of invasion that you can either live through or may be better off moving.
I love a good pros/cons list so here we go…
- Allows you to turn your house into something you would want to live in if you were buying something new, ie creating bigger closets, or updating bathrooms/kitchens;
- Increases the functionality of rooms through furniture layouts or storage options;
- Changes the functionality of a room to meet the changing needs of the family (when I tell you our kids’ playroom has been in 5 different rooms in our house I’m not lying);
- Preserves the emotional and personal memories a home carries; and
- (Possibly) increases the value of a home! Note – not all improvements increase the value of the home proportionately, in other words you will not always get out what you put in.
Downfalls?? Yes there are some of those too. Wait for it…
- Literally, wait for it. Lead times! They have become a way of life. Contractors are booked. Supply chains are jammed. But we have to imagine that all of that will begin to free up as the inflation rate increase causes “demand destruction”. We are already seeing it. Public and private companies are being hit, contractors are still busy but their pipelines are thin. There will be a cliff in the next few months where the demand destruction will have effectively given supply chains a break, and contractors will recognize they don’t have as many projects in the backlog as they did in 2021. I’m here for it when the custom upholstery no longer takes 34 weeks, let’s go!!
- Living through construction. The dust, the banging at 7 am on a Saturday. For some it may be enough to not want to proceed. With good contractors all of that can be managed and minimized to a certain extent.
To make an informed decision, the pros and cons of relocating should be considered as well.
- a new home can have all or close to all of the bucket list items or square footage your current home just cannot accommodate;
- It’s a clean slate without the hassle of living through construction; or
- A new home could be an opportunity to move to a better location.
On the flip side:
- As I mentioned earlier, mortgage rates may hinder your ability to get the square footage needed in the zip code desired. As my realtor and mortgage friends say, “Date the rate, marry the house”. You could always refinance down the road.
- Moving and all the costs associated with relocation add up quickly; and
- Nostalgia! It’s so hard to walk away from those memories.
Whether it’s a remodel, refresh or relocation there is a lot of consider. Utilize your resources and talk to the experts to make an informed decision.