REMODEL OR MOVE?

• Position: Making decisions about housing - Brief Article

You're tired of the old house. You want more space, different rooms, or a new neighborhood. It's time to trade up to another home, maybe even build a new home. Or is it? Would remodeling or adding on be the better way to go? A lot of money is involved in the answer. Such decisions are often made purely on emotions. The Financial Planning Association, Denver, Colo., suggests that there are some economic factors to consider as well:

Don't move solely as an investment. Be sure you want to move because you really desire the extra space or to live in a different neighborhood. Don't buy a bigger home just because prices are climbing. Median home prices in good years might go up four to six percent, and a hot city or neighborhood can climb 10% or more, but you can't count on that year after year. Over the long run, you likely will be better off playing the stock market, not the housing market.

Consider the neighborhood. A home is more than four walls--it is the neighborhood, the view, schools, proximity to grocery stores and restaurants, traffic, crime, etc. You can change your home through remodeling or adding on, but you can't change a neighborhood you don't like.

Consider what you want to change. Do you want to add more square footage, say in the form of another bedroom and bath? Would you "pop the top" by adding a second story? Or is what you want really just a good overhaul--a better kitchen, perhaps? Certain remodeling projects recoup their money better than others when you eventually sell. Major kitchen remodels or adding another bathroom do well; swimming pools do not.

How is your home priced for the neighborhood? Experts say you are more likely to recoup remodeling...