You loved your home when you bought it. But your circumstances have changed - your family has grown or you need to take care of an aging relative. You need a bigger house. But does it make more sense to renovate or relocate?
Should you spend $200,000 to add more living area to an existing house or is it more cost-effective to sell and move to a larger house?
We asked Ron Bickford, builder and president of Rob-Ron Developments, Tony Joe, a real estate salesman with Re/Max Camosun and homeowners who have had to make that decision.
"The key is the location," says Joe.
"If the house is located in a desirable neighbourhood, it may be more advantageous to renovate rather than sell. But some people see changing circumstances as an opportunity to move up into a better neighbourhood."
He says the current home's location also dictates the viability of an addition.
"In the short term, it will be difficult to recoup a $200,000 investment if the improvements make it the nicest - but the most expensive - house in the neighbourhood," he says.
Properties ripe for additions are typically found in older areas of Victoria, which have larger lots than the suburbs. Each municipality has a property-sizeto-house-square-footage ratio. In the last 20 years, builders have been maximizing their ratio, which means many houses built during this period have no extra room to develop.
"There are three questions I always ask clients: How much did you buy the house for initially? How much will the overall price of the house be after renovations? And how long do you expect to stay in your house?" says Bickford, who gets at least a call a week from people trying to decide which way to go.
Like Joe, he recommends against spending more than the location merits.
While most people add new space, some homeowners choose to reconfigure an existing house instead.
"It's all about higher expectations," says Bickford. "A typical 1940s house usually has two to three bedrooms and one bath and a small kitchen. We don't live in our parents' time. We have higher expectations - and so do our children."
But even when it makes sense to relocate, many people choose to stay because they like their house, they like their neighbourhood and they don't want to change schools or increase their commute.
"We took a hard look at both options," says Ryan Enge, a systems administrator who works in Saanich.
"We spent two months looking at houses in Oak Bay before deciding that we would get more for the same price by renovating instead of moving."
He says they started on their quest for more room when his wife was pregnant with the couple's second child. Ultimately, they chose to add 800 square feet to their two-bedroom, 2,300-square-foot Oak Bay bungalow, built in 1946. The two-level addition produced two extra bedrooms on the lower level and added a den and family room on the upper, where there were already two bedrooms. In the process, they also remodelled the kitchen, replaced the perimeter drains and built a detached garage.
"We had been here five years and knew the house and loved the [Foul Bay Road] location. We had equity in the house and we don't plan on moving in a long time," says Enge, who cycles to work daily. "We chose to move to the area initially because my wife and I both liked the local schools. The bonus is that there will be no Colwood Crawl for me."
But renovations can be lengthy and disruptive and have the potential to incur cost overruns once contractors peel back layers of linoleum and plaster. Additions may not always be sympathetic to the existing house or neighbourhood.
Dwayne Cranston opted to buy a newer, larger house instead of renovating his small 1950s bungalow in the Cedar Hill area. "We could have built a 1,500-squarefeet addition to our old house," says Cranston. "But we would have dramatically changed the feel and look of the house. We would still have small rooms with small closets and a small bath in contrast with the addition."
The old house would also have been the largest in the Cedar Hill neighbourhood.
"We had mixed feelings about moving. We were leaving good neighbours with whom we built rela-tions for the past 10 years," he says. "But the new house, at 3,000 square feet, offers significantly more space for my two growing children."
While Cranston moved, he didn't move far. His new house is just a few kilometres from the old, which means his children attend the same school and extracurricular activities as before.
"It was important for us that we were able to stay in the same community, maintain the friendships we developed and hang out with the same soccer parents as before."
MOVING COSTS
Selling one home and buying another can be expensive. Here is a breakdown of what to expect based on selling a $500,000 house and then buying a property worth $700,000. All figures are approximate.
Selling:
Real estate commission on $500,000 sale: $15,000 to $20,000
Legal fees: $1,000 Moving expenses: $2,500
Penalty if breaking an existing mortgage (if applicable): Three months of mortgage payments
Total: $18,500 to $23,500
Buying:
Property transfer tax (one per cent of first $200,000, two per cent on balance) on $700,000: $12,000
Legal fees: $1,000
Moving fees: $2,500
Total: $15,500
Grand total: $26,500 to $31,500
