Should I Build An Addition Or Buy A New Home?
The real estate market continues to be hot in Monmouth and Ocean Counties….and, if you have been paying attention, inventory remains at the lowest levels in decades. We have noticed that many past clients are looking to make a move but are concerned if they sell, they will not be able to find a new home. As a result, the thought of adding on or adding up seems like the best solution. Having experience with both construction and additions, along with understanding the real estate market, I always advise clients that there are a lot of things to consider. Too often, I see homeowners make really bad decisions that have them throwing good money at bad……. Take for example, this charming cape cod style home that developed a growth on its hip. This is one we would call a FAIL on all accounts.
An existing structure may accommodate an addition if it is laid out correctly and can be integrated into the property and neighborhood. Once you determine whether building an addition makes sense for the current structure and lot, you will then evaluate whether it makes sense financially. Ideally, when doing an addition, you would like the cost of construction related expenses (& temporary moving expenses) to be less than, or equal to, the value added. If you are considering an addition, feel free to contact us for a consult. We will help you avoid pitfalls and determine cost-effective improvements that will generate the most value.
RELATED COSTS
Unless you have cash, you will have to figure costs related to funding the addition through a home equity line of credit or other construction related loan. This cost plus the existing mortgage may be as much as a mortgage on a new home. Additionally, many homeowners plan on saving money by remaining in their residence during construction instead of leasing a home. On top of the inconvenience, you should discuss with your contractor the extra time and costs related to working around your living conditions. Also, staying in your home may not be an option due to the complexity of the project.
UNFORESEEN COSTS
Addition costs will vary greatly depending on the square footage, materials, and difficulty of merging the new design with an existing structure. Moreover, costs can grow drastically when upscale finishes are preferred, especially for a kitchen or bath. Marble countertops, high-end cabinetry, appliances, and fixtures can break the bank. You need to do your homework and decide whether your taste fits your budget.
If your existing residence is older, then increasing space may not be time and cost effective. This is primarily due to unexpected structural issues which are often discovered during remodeling and or addition projects. Many expensive surprises may pop up when building an addition onto an existing home. Consider this in your budget and expect 10% more in unforeseen expenses when going the addition route.
BUYING VS ADDITION
Key factors when deciding to build an addition or buy a new house is the current state of the housing market. How many homes are available that will suit your needs and what are these homes selling for? What is the current market value of your home? How much money will you spend in moving and closing costs? What are the prices of new home construction? What is the likelihood of staying in your current home after an addition? This financial analysis is integral to the decision-making process.
If you would like more detailed information on your local market or would like to determine the value of your home, please give the Paradise Team a call at 732-899-3338.
