Over the past year, the idea of what the home looks like and its daily purpose has changed for many people.
Sure, we wanted to have our creature comforts to come home to after a long day at work. But the COVID-19 pandemic brought new challenges to how we use the space available to us and how we view the long-term viability of our current homes.
For those looking to buy a home for the first time, the expectations of a starter home may now be expanded to something bigger than first imagined, and low interest rates can make it easier for first time homebuyers to find and buy a house that meets their new needs.
For current homeowners, however, deciding whether to renovate or buy a new home is more complicated. While there is no clear-cut answer that applies to everyone, there are factors all homeowners should take into consideration.
Location, Location, Location
The first question homeowners should ask themselves is “Do I like where I am?” Think about this question with a long-term lens. Short term needs, like remote working or schooling during the pandemic, can sometimes be addressed with a smaller investment, like a corner desk setup in a bedroom or other area of the house.
But if full or partial remote working is likely in your long term future, or you simply want to enjoy the extra time you spend at home in new ways, then it’s important to assess what you like about your current home’s location.
Do you like the town and neighborhood enough to fully commit to staying there for the foreseeable future? Does the school system meet your kids’ needs? Do you want to stay in this community but want a more desirable yard to go with more indoor space?
Use these lifestyle and comfort factors when thinking about whether renovating or buying new is best for you.
Can You Find What You Need in a New Home?
While mortgage interest rates are at historic lows, housing inventory continues to be very tight in many areas. Competition among buyers is fierce, with some homes getting multiple qualified offers within a couple days or less.
This has driven a rapid increase in home prices, increasing fears that some very qualified homebuyers may still be priced out of the homes they desire. Work closely with your lender and realtor to develop a strategy that makes you an attractive buyer financially.
Now is the time to think hard about what you want in a new home, including your flexibility on features and location. If you find yourself having a limited universe of homes to choose from, it may be wise to consider renovating.
Do You Actually Have More Home Than You Need?
This one is a bit trickier to answer. For example, are you an empty nester or expecting to be in the next few years? Can you make short term, less expensive investments in your current home and use the low rate environment to refinance, then use the savings to buy that cottage in the mountains you’ve been dreaming about for vacations and retirement?
For other homeowners, now may be a good time to downsize from suburban homes and buy in the city, where the convenience of location to desirable amenities or reduced need for the expense of owning a vehicle may be appealing.
Weigh Your Financing Options
If you decide to buy a new home, talk to your bank or current lender about financing options. In today’s interest rate environment, you may be better off financing a larger amount and keeping more of your money aside for personalizing your new home than making a large cash down payment.
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