Renovating Your Home vs. Selling Your Home

By Emily Southey | 13 minute read

If you’re a homeowner unsatisfied with your current living situation, you have two options: renovate your home or move into a new home. There’s a lot to consider when it comes to making this decision. Cost, timing, life goals, and the housing market are all factors that must be considered when deciding if renovating or selling your home is right for you. To help you make this tough decision, we’ve put together the following guide. 

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Key Considerations When Deciding to Renovate or Sell Your Home

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Before weighing the pros and cons of each option, homeowners must stop and consider several factors. From the cost of moving vs. renovating to the housing market in your neighbourhood, considering the factors below can help you come to a decision. 

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Cost

Cost is a major factor for most homeowners in Canada. So if budget is a concern for you, you’ll want to crunch the numbers on whether renovating your existing home is going to be cheaper or more expensive than moving into a new one. Whether or not it’s cheaper to renovate or sell depends on your savings, as well as your mortgage. Try to realistically compare the cost of moving and buying a new home with that of renovating your current home to the degree you’d need to stay there. If the homes in your neighbourhood are affordable, you may decide that moving is the best decision. However, if the market in your neighbourhood is hot and buying would cost you an arm and a leg, it may be best to stay put and use that money for renovations. Keep in mind that renovations translate to immediate, out-of-pocket expenses, whereas moving will cost less upfront but likely more down the line. In addition, homeowners need to be prepared for the unexpected costs that come with both renovating and selling. The cost of renovations and buying homes is at an all-time high. Materials, supplies, and labour, all of which are needed to remodel a home, are more expensive than ever before. Similarly, the housing market is hot, which means there is not enough supply to keep up with demand, leading to many homes being sold for tens of thousands of dollars over asking. Beyond the purchase price of the new home, homeowners must also budget for closing costs, land transfer taxes, and moving expenses. 

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Timing

Beyond cost, homebuyers should also consider timing. The reality is that along with being stressful and time-consuming, moving isn’t always feasible. If you have school-aged children, moving could mean changing school districts and forcing your children out of their school partway through the year. It could also mean a change in commute routes or mortgage fees that simply isn’t manageable. On the other hand, the costs associated with renovations are immediate, so if your eldest child is heading to college next year or your family is planning a big vacation, moving may be a wiser decision than paying tens of thousands of dollars to remodel your kitchen.

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Local housing market

Your next consideration is the local housing market. Consider whether the market is hot and you’d see a significant return on your investment, or if the market has cooled, meaning you may not get the most out of your investment if you sold now. Research market conditions before making this decision so that you’re fully informed about the current state of the market. You may even enlist the help of a professional by asking a REALTOR® their opinion on whether you’re better off selling or renovating your home. Beyond market conditions, consider market trends like seasonality. Spring and summer are the most popular times to sell homes, whereas fall and winter are considered off-peak, meaning your home may sit on the market longer if you choose to list between September and February. 

Life goals

When deciding between renovating and selling your home, consider your life goals. If you renovated, could you picture yourself living in your current home for a long time? Are you and your partner thinking about having a child and plan to move to a quieter neighbourhood in the next five years anyway? To make the right decision for you, consider your lifestyle, as well as your personal goals as they relate to your family, career, and hobbies such as travelling. 

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Emotional attachment

Emotional attachment is another factor to consider when making this decision. If you and your family have lived in the same home for decades, then chances are it holds some sentimental value. You may find out that you’re more attached to your home than you realized when the prospect of selling it becomes real. Consider the emotional impact of selling your home on both yourself and the members of your family. If your children grew up in that home, or perhaps it was the last place you spent with a loved one, the emotional attachment to the home may be too strong to justify moving. On the other hand, an emotional attachment linked to grief may make moving a more attractive (albeit difficult) proposition. 

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Questions to ask yourself

After taking into account the considerations above, ask yourself the following questions to provide even further clarity:

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• Do I have enough savings to buy a new home? In affordable neighbourhoods, buying a new home may be the more attractive option. But if you live in a hot market where you’ll likely have to pay over asking for a new home, remodelling may be the wiser choice. 
• Do I want to stay in the neighbourhood I’m currently in? If you like your neighbourhood and would prefer to stay there, then selling your home may mean the difference of moving a few blocks. You’ll need to consider if selling your home and moving into a new one is worth it if you plan to stay in the same neighbourhood. 
• Will the renovations I want increase the property value of my home? Some remodels instantly boost the property value of a home, while others have minimal if any impact on a home’s value. Consult with an expert to discover which categories your desired renovations fall into. If it’s the latter, moving may be a smarter decision.  
• Do the renovations I want involve structural changes? Keep in mind that renovation projects can be wildly different in price. While a minor renovation may set you back a few thousand dollars, a major one could cost you tens if not hundreds of thousands of dollars. Generally speaking, if your renovation involves changing the structural elements of the property, it will be significantly more expensive.  
• Do I want to stay in my home long-term? If the answer to this question is no, then remodelling may not be worthwhile. For example, if you recently got married and plan on having kids in the next few years, chances are you’ll soon want to upgrade to a bigger home or a quieter neighbourhood. Alternatively, if you envision yourself living in your home for years or even decades in the future, then renovating it could be the right decision.

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How would moving impact my mortgage and property taxes? Beyond the price of purchasing a new home, you will need to consider how moving could affect your mortgage or property taxes. Buying a new home could mean a lower mortgage, but it could also mean a higher one, depending on market conditions. Meanwhile, property taxes vary by municipality, so if you move to a new part of the province, your property taxes could change.

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Renovate

So you’re deciding whether to renovate or sell your home, and you’re leaning toward renovating. Here’s what you need to know: 

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The pros of renovating

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• Renovating may increase the value of your home: One major pro to renovating is that doing so could increase the value of your home. Therefore, not only would renovating make you more comfortable in your home in the short term, it could result in a higher selling price should you decide to sell it in the future. Choose renovation projects wisely if part of your goal is to boost the property value of your home. Bathroom and kitchen remodels, finishing your basement, and replacing old windows can all add value to your home. 
• Renovations can be customized to suit your needs: Renovating your home allows you to create something that is entirely customized to meet your needs. Remodelling gives you an opportunity to add the structural and design features you love. Instead of spending hundreds of thousands of dollars on a new home, you can put a fraction of that money toward upgrading the home you currently love and live in. 
• Renovating may cost less: Typically, the cost of remodelling a home is less than buying one new. Unless you were planning to gut and redo the entire home, renovating allows you to tackle particular rooms that need an upgrade. Plus, it’s entirely up to you to remodel as much or as little of your home as you wish. Only have the budget to remodel the powder room? Start with that and hold off on renovating the kitchen until you have the savings.

The cons of renovating

• Renovating may come with hidden costs or delays: Contactors aim to provide accurate quotes for all renovation projects, but the final price often ends up being different than the quote. Pest infestations, mould, building codes, or structural changes are just a few of the variables that may lead to a more expensive renovation project. These variables can also cause delays. Contractors are not known for their time management, which means you could be living in a construction zone (more on that below) for longer than you anticipated. If you choose to go the route of renovating your home, research contractors and try to hire one that is known for their communication and punctuality.  
• Renovating means living in a work zone: Homeowners must remember that when they renovate their homes, they might be living in a construction zone for the duration of the project. Loud noises, dirt and dust, and strangers in your home are just a few of the realities of home renovations. Depending on which room is being renovated, this could mean going without access to a kitchen or bedroom, leading to many nights eating takeout on the couch or two or more people sharing a bedroom or bathroom. Plus, renovations can be lengthy (even lengthier than originally estimated), which means you could be living in a construction zone for weeks on end. If this sounds too disruptive, renovating may not be for you. 
• Renovating can be a risky investment: The final con of renovating a home is that renovations are risky investments. There is no guarantee that your renovation will boost the property value of your home. If it doesn’t, then you will not recoup any of the money you poured into the renovation. Sure, you get to enjoy the completed renovation for as long as you’re living in it. But when it comes time to sell, you may have nothing to show for it. Before scheduling a renovation, research which renovations offer the biggest return on investment. Minor projects, like garage door replacements, tend to be safer investments than major kitchen or master suite remodels.

Sell

If selling your home and moving into a new one is the option that appeals to you most, consider the pros and cons below.

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The pros of selling

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• Selling represents a fresh start: Are you unhappy or complacent in your current home? Then it might be time to sell. One of the most attractive aspects of moving into a new home is that it’s a fresh start. Once your home is sold, the options are limitless. You can move neighbourhoods, cities, or even countries. You can purchase a house, condo, townhouse, or duplex. This change of perspective might be just what you need in your life. 
• Selling offers a new investment: Real estate is a great investment, and by selling your current home and moving into a new one, you’re gaining a brand new investment. Whether you’re looking to downsize or upgrade from a condo to a three-bedroom home, selling your property could give you the equity you need to pay off your mortgage and even cover moving expenses and closing costs. 
• Selling allows you to avoid the hassle of renovating: Lastly, renovation projects are stressful. They almost always go on longer than the contractor estimates and often cost more than the original quote. Relocating allows you to find a home that suits your family’s needs and lifestyles without pouring tens of thousands of dollars into a renovation project that may or may not pay off.

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The cons of selling

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• Selling means paying moving expenses: Moving is expensive, and these are costs that homeowners seldom recoup. Beyond the price (and hassle) of hiring movers to move your belongings from your current home to your new house, there are additional costs associated with selling your home. Hiring a REALTOR®, home repairs, house inspection costs, and staging is all money out of your pocket to facilitate the sale of your home.  
• Selling your home and buying a new one is expensive: Depending on the market, buying a new home can be incredibly expensive. Beyond the costs associated with selling your home that are listed above, you might have to pay more than you want to for a new house in a hot market. If demand outpaces supply in your neighbourhood, you might get a premium for selling your home but you may also have to pay well over asking for your new property, not leaving you with much (or any) equity.  
• Selling a home is stressful: Last but not least, selling a house is stressful. It’s time-consuming and requires you to make your home available for showings. Plus, if you’re selling your home, then you’ll need to be looking for a new house during the selling process. Buying and selling a home at the same time can be incredibly overwhelming. 

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A Third Option: Refinancing Your Home

If neither renovating nor selling your home feels like the right decision, there is a third option: refinancing your home. Refinancing your house means renegotiating your existing mortgage loan agreement. Typically, it involves the homeowner paying off an existing loan and replacing it with a new one. Refinancing can be advantageous for homeowners, especially if they are struggling financially. The most common reasons homeowners choose to refinance are to obtain a lower interest rate, to consolidate debt, and to shorten the loan term of their mortgage and pay off their loan sooner.