When considering a question like “Should I Renovate OR Should Move”, it can be hard to know where to start. Answering these questions can help you identify the parameters that are important to you. If you are trying to figure out these questions with a partner or family members, every person should answer these questions for themselves:

1. What do you want?

2. Why do you want it? Which aspects are most important?

3. What will it mean for you if you get that?

4. How will that make you feel?

5. What will it cost you if you don’t get it?

You've looked at your budget, talked to a lender, and analyzed your home equity. You’ve determined that you have some money to spend on a renovation. Now what?

Renovations are expensive. Renovations cost just as much, if not more, per square foot than building new. This is because it takes more time and skill to address existing conditions. There are always surprises hidden behind walls.

Even so, renovating can make financial sense, but knowing your market is an important part of the strategy.

If you are in a Buyer’s Market (meaning there is a surplus of homes for sale and you are competing with other sellers) then a renovation to key areas of the home can give you a competitive edge. Note that it is rare or impossible to recoup the full value of a renovation in your home’s sales price if you turn around and sell your home right after doing a renovation/addition. For this reason, it usually doesn’t make financial sense, even in a Buyer’s Market, to do a substantial renovation/addition unless you plan to stay in the home for a couple of years afterwards. This allows time for the value of your home to increase enough to cover more of the costs.

In a Seller’s Market (meaning there is a shortage of homes and buyers are competing to buy a home) things look different. In this market, buyers are less picky, and will tend to overlook imperfections. You will often fare better financially by moving than by renovating. That is, IF you can find a home to move to, that meets your requirements. In a Seller’s Market, it can be difficult to move.

This is a personal question as much as a strategic one. On the personal side, only you can decide the value of a renovation or an addition to you. Personal values include:

your neighborhood, local community & connections

your school district

special features of your house or landscape

memories

desire to create something special, tailored to you

These are hard to quantify but can be AS or MORE important that purely financial considerations. To be strategic on a purely financial level, you must have a sense of:

your equity in the home

the amount of time you wish to stay in the home after renovating

the kind of market you are in (Buyer’s or Seller’s)

the potential sales price of the home before and after renovating

Many homeowners feel confident about spending the value of their equity in the home on a renovation. For example, if you bought your home for $450,000 and it is currently valued at $800,000, you could spend $350,000 in equity to “break even”. But because your renovation will add value, you could consider spending up to the value of your post-renovation sales price to truly “break even”. That means that if, post renovation, you can sell your house for $1,000,000 in the current market, you could consider spending $550,000 on your renovation to “break even”.

If you assume that property value will continue to increase with time and you know that you will remain in the house for 5-10 years, you may expect to earn a profit when you sell.

You may also look at the cost of buying a home that has all of the features you want. If this costs MORE THAN or THE SAME AS the cost of your renovation + original purchase price then it may make sense to renovate. With a renovation you get to impact the quality of the work, the choice of materials, and you can tailor the specifics to your desires.

In the end, financial considerations are only one part of the picture. The true value of a renovation lies in how it impacts you. It is a subjective decision.

Time & Cost & Quality

Imagine a triangle. Each point of the triangle represents one of the interdependent factors that underpin a building project. Time. Cost. Quality.

The common adage about this triangle is that you can only pick two. Therefore you must choose which two are most important to you. If you want to prioritize time & cost, you will sacrifice on quality. And so forth.

This is a useful adage to keep in mind as you evaluate renovation costs as well as during the entire renovation process.

Components of Cost

Many people focus on the cost per square foot of a renovation. This cost is important, but it is not the entire picture. Other costs to consider are: consultants, permitting, landscape & sitework

1. The cost per square foot (sf) of a renovation is driven by market forces. These can be global, national, and local forces. Building exactly the same thing in one region of the country at the same time as in a different region can be vastly more expensive. Material pricing fluctuates and drives pricing. Local labor markets also fluctuate. Profit margins increase in boom times and decrease in recessions. Quality and skill of labor also drives pricing.

2. Consultants. Consultants are not included in cost per sf estimates or calculations. They can include: architects, interior designers, structural engineers, civil engineers, geotechnical engineers, and landscape architects, among others.

3. Permitting. These costs include permit applications, special reviews (historical, watershed, zoning, etc), and inspections

4. Landscape and Sitework. Driveways, plantings, landscape lighting, pathways, patios, etc are not included in cost per sf estimates.

Working with a professional can help you gauge costs. Because pricing is influenced by many factors, each project is unique.

At Charlton Architecture, we provide expected project cost ranges based on our experience. We collaborate with builders early for dynamic design pricing to keep the project on budget.

Scale & Complexity

It is a common misconception that “small” renovations will cost less per sf than “large” renovations. In fact, the opposite is true.

This is because all projects require upfront investment. Equipment must be brought to the site. Footings must be dug. And so forth. As a percentage of overall project cost, these upfront elements are less significant the larger the project. In other words, the project scale dilutes their impact on price.

Another factor in cost per sf is that the most expensive rooms to renovate are kitchens and bathrooms (wet rooms). They require many skilled trades in a small space (plumbers, electricians, cabinet makers, tilers) and are host to expensive equipment (appliances, plumbing fixtures, special lighting). The larger your overall project is, the more dilute these components are in the cost per sf. It is relatively inexpensive to build dry rooms, so the more sf you have in your project that is “dry”, the lower your overall cost per sf will be.

Lastly, complexity drives cost. Some examples of complexity are: difficult sites (steep slopes, rocks, access), complex geometries, and custom details. Many of these elements are either unavoidable or highly desirable, and worth the increased cost per sf. But when they can be avoided without sacrificing the project goals, they should be.

Moving and renovating both take time. Finding the right house, especially in a Seller’s Market, can feel impossible. You may look for months or even years before finding the right fit for you.

It is unlikely, perhaps even impossible to find a perfect home. Compromise is usually necessary. Therefore, after moving, you may find that you are still considering a renovation or addition on the new house in order to make it work well for you.

Renovations & additions require planning. Unless you are doing only small cosmetic updates, such as painting, it is wise to hire a design professional. Architects have the experience to guide you through a project, offer solutions you have not considered, and help to manage the large amount of information involved in design & construction.

Architects help you to translate your ideas, feelings, and desires into space. This is the FUN of renovation — the act of creation. The manifestation of your ideas in the real world!

Architects produce detailed DRAWINGS & DOCUMENTS that establish expectations, facilitate shared expectations, and provide a basis for recourse should construction deviate from the design objectives.

When design is complete, the project must be permitted and construction begins. When contractors are busy it can take months to get on their schedule. An architect can guide you to make this process as streamlined as possible.

The amount of time it takes to design and build a renovation or addition is relative to the scale and complexity of the project. HGTV renovation shows do not reflect a realistic timeline! From start to finish, the process of designing and building renovations/additions can take months. For large projects it can take more than a year.

Renovations disrupt your life. They are invasive, noisy, and dirty. For larger renovations, it will be necessary to move out of your house for some portion of the project or possibly the entire project. Accounting for the time and energy you will spend on the project during both design & construction is essential. With the right expectations, this experience can be a positive one.