Move or renovate?

Home appreciation is at a post World War II high, and interest rates are at a low not seen since returning GI’s with new families were hell-bent to own a piece of the American dream — a family home. Low interest rates and government loan guarantee programs made money available, and homes sprung up across the national landscape. His GI Bill benefits in hand, the veteran, Mr. Middle America was, for the first time in history, king of his own domain.

Now these homes, new in the 50s and 60s, are aging. Their sea-foam green dinettes, shag carpets and gold refrigerators are museum pieces. The homes, which have raised several families and perhaps have been bought and sold, are more than ready for a new life.

Never has the question, move or renovate, been so important. For many reasons, like the expansion of mass transit systems and technology, housing has skyrocketed in value. This is great if you’re selling, but if you’re looking to simply enlarge, improve, or change your current home in anticipation of retiring in place, the excitement pales.

For those building a new home from the ground up, or buying an existing home, would-be homebuyers must content with escalating costs of land, reasonable commute distances, and a shortage of affordable homes.

On the other hand, remodeling prices haven’t gone up at anywhere near the rate of new homes. Remodeling has become a means to improve lifestyle and increase the value of the current home.

But exactly how much value is added when a remodeling project is undertaken? The recent 2002 Cost vs. Value Report, featured in Remodeling Magazine, is a general guide to the cost of specific projects and how much those projects would add to the value of the home should it be sold within one year. The percentages in the accompanying chart show how much of the project cost is recouped within the first year.

And paying for a remodel is easier than most homeowners think. Banks will lend homeowners the money to renovate based on the value of the home after the renovation, which makes a lot of sense in today’s current economic climate.