Move or Improve? Making the Case for a Home Renovation
You don’t have to be a Realtor to know that there is a massive shortage in single-family housing inventory right now. The onslaught of Covid-19 prompted a huge swath of city dwellers to seek refuge in the suburbs and exurbs, exacerbating stiff competition on the housing market. There are countless industry reports on this subject. The competition is so fierce that even house hunters with strong financial backing find themselves losing to other bidders. It’s par-for-the-course to hear of homes being purchased sight-unseen, inspections waived, and full cash offers.
So what are the alternatives to moving if your current living condition completely warrants a move?
Well, let’s ask ourselves a few questions first; What is it that has you contemplating a move? Have you outgrown your space? Has the neighborhood taken a turn for the worse? Do you have kids approaching a certain age and a better school district is desired? Are you obligated to move for employment purposes? Are you downsizing? Upsizing? Seeking investment opportunities?
Working in the mortgage industry has given me a firsthand look at the frustration on all sides of recent residential real estate transactions. Prospective buyers, who up until a year ago had a pretty decent chance of securing a new home, are now stopped dead in their tracks. Realtors, who are becoming burnt out by showing home after home, know very well that their efforts could prove fruitless. And lenders, like myself, are sitting on a pile of pre-approvals for borrowers who can’t find a home to purchase due to being overbid on everything they’ve been shown.
Like it or not, this is the state of the housing market right now. So what can you do about it?
Take a look at your current living situation. In fact, take a look at my very own living situation: My wife and I bought our home back in the height of the 2007 housing market. Right before the bubble exploded it’s excrement all over us (what can I say? Timing has never been my thing).
My wife and I decided to take the ultra-conservative approach and not bite off more than we could chew in terms of financing a new home. And at that time, everything was priced sky-high and any homes for sale within our budget needed at least $50K in additional repairs to be considered livable. After nearly giving up on our search, our realtor found us a tiny little house in great condition. We thought, for the short term, this will be perfect for us and our 105lb chocolate lab. We’ll live here for a couple of years, build some equity, and make the move to a bigger, better place when it’s time to start having kids.
Well, the kids came, but the market crashed. Now our loan exceeded the home’s value and it felt like we were throwing money into a bottomless pit month-after-month, year-after-year. And when things like the heater and other appliances started breaking down, it got costly real quick! Long story short, I’ll fast-forward 14 years and happily report that we do have equity in our home now. But guess what?? It’s still the SAME TINY HOUSE!!
It brings me to the foundational point of this article. My wife and I have been tossing around the prospects of moving almost since the day we bought our home in that summer of 2007. And even though we’re in a much better position to move financially, it almost feels as though we can’t due to the current state of affairs. Sure, we could sell our home (for a modest profit) and be able to afford a bigger house in a better school district. Problem is, so can everyone else in a similar situation as us. And quite frankly, the neighborhood and our kids’ friends have sort of grown on us. Maybe the grass isn’t so green on the other side?
Lucky for us, we have another option: Home Renovation. In fact, we have more land than we do home. So I feel like we’re perfect candidates to consider expanding our home’s footprint to add some additional square footage to give us the space we need to be comfortable, without over-building ourselves out of comparable home sales in the area. It’s certainly a balancing act that needs to be considered and worthy of a conversation with your Realtor.
The other thing we have going for is that I’m a Loan Officer with CrossCountry Mortgage, with some of the absolute BEST home renovation loan products available (it was actually an internal CrossCountry sales webinar that I attended today that inspired me to write this article)! If you’ve been toying with the idea of a home renovation, there’s an extremely good chance that CrossCountry could be the lender to help get it done.
Hopefully I’ve inspired you to consider your options. There are certainly factors to consider with home renovations. For example, I wonder how we will go about our days working and schooling remotely with a crew of contractors hammering away. And how will economic factors such as contractor labor shortages and building material cost surges affect renovating? And will the contractor I wish to hire be available if and when we decide to pursue a renovation?
I’m definitely an overthinker, but also optimistic that my timing may be in my favor this time around!
My name is Gabe Schick, a Loan Officer with CrossCountry Mortgage – AMG Team, personally licensed in the states of New Jersey and Pennsylvania, NMLS2015163, providing residential mortgages in the form of home purchases, refinances, and home improvements. As a Marine Corps Veteran, I also specialize in VA loans. Contact can be made by calling (609)240-1767, or email at [email protected]. I'd be happy to discuss your home lending needs!