Resources > How to Decide Between Moving or Remodeling

How to Decide Between Moving or Remodeling

You’ve decided its time for a change or upgrade for a number of reasons.   Your house doesn’t fit your needs, and you can’t deny it anymore.  The first step is to evaluate your motivation for change.  Is it because you need to move closer to work or do you feel you’ve hit the maximum capacity of your space?  If you enjoy your current location you may want to consider investing in your existing home.

Everything from a growing family to increasing clutter or a rising income can make it seem like a good time to buy a new home or remodel an existing one. However, these two options are very different in terms of cost and impact on lifestyle.

The Neighborhood

If you like your neighborhood, consider remodeling. Think about the people who live near you, the school district and your proximity to the places to which you routinely go. If you are happy with all or most of those elements and if you do not need to move for at least five years, remodeling is probably is a good idea. If you are dissatisfied with any or all of those aspects of your current home and can afford to buy a new house that might be the best option.


It is typically unwise to remodel to the point of making improvements that exceed the other homes in the neighborhood. You will want to obtain an appraisal of your home. Then, look for homes nearby that have recently sold with improvements similar to the ones you want to make. To determine whether remodeling will be worth doing, consider how much your improvements will cost and compare that with the price your home will likely bring.  A good source for what your renovations might bring is the annual list published by Remodeling magazine and the National Association of Realtors. The list evaluates how much return you can expect from a given home improvement. If you have a viable neighborhood and if you are bringing your home up to or slightly above neighborhood standards, from the financial side, you almost can’t go wrong by renovating.  Be sure to double check that there are no restrictions on the improvements you want to make, for example, many communities put limits on how big a house can be in relation to its plot of land.

Analyze all the factors to get the total cost of moving, including real estate commissions, improvements you will need to make to the home prior to selling, financing charges, moving costs, utility deposits etc. If it will be cheaper to remodel than to buy a house with the features you want, then you might want to remodel. Choose your project wisely. For example, if you just don’t like the colors or style of your kitchen, but it is only 10 years old, it might not be worth it to remodel. But if the kitchen is from the 1970s, then it probably would be worth it.


Remodeling an existing home can be a small, inexpensive project designed to add storage space or update fixtures, or a large, costly undertaking that includes every room and leaves very little of the original interior intact. Building a new home on the same lot as an existing home carries the added cost of demolishing the old home, while building a new home elsewhere means buying land and deciding on what type of house to build there.

Interest Rates

One of the biggest factors in the cost of remodeling or building a new home is the available interest rate. Homeowners who choose to remodel may fund the project from savings, but a home equity loan or line of credit is a more common option. The cost of this sort of borrowing depends on the borrower’s credit, the terms of the loan (such as a fixed-rate or adjustable-rate loan) and interest rates elsewhere in the economy. The same factors impact rates for a new mortgage.


The cost of remodeling versus building also depends on the location of the home. Remodeling a home in a community with high property tax rates may mean a much higher annual tax bill. At the same time, building a new home gives the homeowner a choice of neighborhoods, making it possible to buy in a low-tax community or buy inexpensive land in an area where home values are low but likely to increase.

Going Green

Remodeling or building a new home is an opportunity to practice good environmental stewardship, which can also have a major impact on costs. A green remodel using energy-efficient appliances can increase a home’s value more than installing basic appliances. Building a new home using high-efficiency insulation and energy-saving appliances and water-saving fixtures reduces average utility costs.

Time Frame

Ultimately, the cost-effective decision between remodeling or building a new home may depend on how long you plan to stay in the house. Remodeling may be best for homeowners who either can’t afford to build a new home or plan to stay in the home for an extended period of time and want it to better meet their needs. Building a new home, though more expensive, can pay off when homeowners sell before an adjustable-rate mortgage increases or take advantage of a rising housing market by selling a still relatively new home for significantly more than it cost to build.

Once you have decided whether you will remodel your existing home or build a new home, visit for a complete list of certified builders and remodelers.