Should you move or renovate?
A recent headline in a local paper cried out “Put Your Money Into a New Home and Beat the High Cost of Renovating.” While it is true that most people don’t spend much money on renovations shortly after purchasing a new home, there are other financial implications involved. What are some of the issues, both financial and otherwise, to be considered when thinking of buying a new home versus staying and possibly renovating?
First, let us consider some of the advantages to buying a new home. An obvious one is that everythingis new. Your new house should require less maintenance than an older house, especially for the first few years. You may also benefit from some technological improvements that have been made since your existing home was built. Furthermore, a warranty by the Ontario New Home Warranty Program does give you considerable protection against big, bad surprises for several years. You will also find that today even tract home builders offer much more customization than was offered in the past, so design possibilities are limited only by your site and budget. Finally, although you will have to move, you’ll not have to live through the inconveniences of renovating.
But buying a brand-new home can have some disadvantages too. On the financial side of things, many consumers are not aware that tens of thousandsof dollars of the purchase price have gone into development charges to the municipalities, school boards and others. G.S.T., at a reduced rate of 4.48%, will also apply. Older existing homes had very little in the way of these types of fees and taxes built into their cost base. Lots in new subdivisions are often much smaller than those in similarly priced older neighbourhoods. Depending on your point of view, this could be either an advantage or a disadvantage!
If you are building new, you will be faced with choosing everything for the whole house in a short period of time, and may find that you cannot devote the same attention to detail as when you renovate small sections of your home. This may result in a lot of “if only we had done..., instead!” Staying in your existing home will allow you to enjoy many advantages even beforeyou renovate, such as an established neighbourhood, mature landscaping, and possibly a more convenient location than those afforded in the suburbs or rural areas. You may have heard the expression “better the devil you know than the one you don’t know.”. This can definitely apply to your neighbours and the schools and friends of your children. Also, for many people both single and otherwise, the emotional attachment to a particular home is very strong.
If you decide to stay and renovate, you may be able to re-do section by section of your home and “pay as you go,” rather than go deeply into debt to get it all at once in a new home. Most people get their best ideas of what they would like in their home over a period of time. Having built two new homes for my own family, I have experienced the “if only I had done it this way” syndrome several times. Then we were able to experience the “joys of renovating” as well.
Some time ago, a study showed that most new home buyers spend less time considering a home purchase than choosing a new car. It is my hope that you will consider carefully all the implications of buying new, staying put, or staying put and renovating.
Harold Kuehn is a co-owner of Harold Kuehn Construction Ltd., and outgoing chair of the OCHBA Renovator’s Councicil.