Home prices going up? Think refurbishing

In the last three years, the homes in our neck of the woods have more than doubled in price. Some subdivisions are holding lotteries where 400 people or more are in line for 20 to 30 home releases. Although this condition does not exist in every community, there are similar pockets of rampant growth nationwide. Interestingly, mortgage rates are still low. 'Growth' areas If you live near one of these "growth" areas, then you need to take heed. It now makes more sense than ever to refurbish your existing home rather than move to another. This is especially true if you enjoy several good neighborhood relationships, a school district you love and if you don't have a long commute to work. Yes, construction costs are high - and that goes for remodeling too. Whenever new housing is selling well, construction workers have plenty of jobs and the "supply-demand" benchmark is raised - and prices rise across the board including remodel and room-addition construction costs. But, even though the costs of both new and remodel construction are high, associated costs are low in the remodeling arena. For example: With a remodel, your existing tax rate is only slightly affected by added features and maybe not affected at all by replacements such as new cabinets or appliances. After the dust settles, a tax savings alone can be worth thousands of dollars every year. This is unlike moving to another home where your property tax can easily more than double. There are other things to consider when comparing moving and remodeling. There are the "not so obvious" costs that are an integral part of moving to a new home that don't come into play with a remodel or room addition: · Moving costs are real; even if you move yourself, there will be a cost. · In addition to property taxes, your homeowner's insurance premium can easily double with a move to a new home. · With a new home, all or part of the yard will probably have to be landscaped. Americans tend to tire of their homes very easily, wanting more space, more and different features, and most of all, less maintenance. A carefully planned remodel can achieve all of these things without the costs associated with moving. Tired of the old countertop or cabinets? Change them. Your taxes and insurance should remain about the same and that part of your home will look new again. Need more room for a growing family? Going out is cheaper than going up. Ground floor construction costs less and happens faster than building over existing construction. Yes, there are some "hidden costs" associated with room additions just like there are with any new construction. Property taxes can rise and landscaping will, most likely, be affected. Also, furniture and window coverings will be needed. But again, even with a room addition, overall costs will be less than when moving is involved. Remodel construction will cost more per square foot than new construction, but your overall out-of-pocket expense should be considerably less. In any event, when it comes time to make the decision it will be important to compare all the costs that we've mentioned here. Refinancing your home for a major project is a great alternative. With interest rates low, adding to your home can be nearly painless. Be careful to select the loan wisely. Variable or floating rate loans can sound great when rates are low, but the rising cost of such a loan can catch up with you in no time and the increased rate can take a big bite out of your pocketbook. Cost of remodel By the way, the cost of a remodel is directly related to the value it creates. Spending $25,000 and getting back $35,000 for the investment makes a lot of sense. However, it could go the other way. For example, overbuilding can be costly. Expanding your home to a size not in keeping with the neighborhood can result in lost value. The biggest home in the neighborhood won't sell for much more than the largest that already exist. It would probably be a mistake to build a 6,000-square-foot home in a neighborhood where the homes average 2,000 square feet. Carefully plan the size of your home and be equally careful when you select the interior and exterior appointments. And, that's all there is to it.