Cover story: Deciding whether to move or remodel

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By Michele Lerner SPECIAL TO THE WASHINGTON TIMES

It's always been tough for homeowners to decide whether to remodel their current home or move to another one that better meets their needs. In addition, the current housing market makes it impossible for some homeowners to move right now.

"Financially, the answer about whether to move or remodel changes based on the market, but the questions homeowners need to ask themselves don't change," says Dan Fritschen, author of "Remodel or Move? Make the Right Decision."

Mr. Fritschen says an economist making a strictly financial decision might suggest moving. While people may have to sell a home for less money, they can buy a larger or higher quality home for much less than in previous years.

"In the heyday of the hot real estate market, the value of someone's home in most markets was higher than in today's market, but so was the cost of remodeling," he says. "Today, the value of homes has dropped, but the cost of remodeling has also dropped by about 20 percent."

Donald Lynch, president of Lynch Construction Inc. and the Home Builders Association of Maryland (HBAM) Remodelers, says the most important question for homeowners to answer is whether they like the area where they live.

"If someone likes their neighborhood but dislikes some features about their home, it might make more sense to remodel than to move," Mr. Lynch says. "But consumers also need to give some thought to how long they intend to stay in their home. If they are expecting to move within a few years, it may not make sense to spend a substantial amount of money on remodeling."

Financially, homeowners need to investigate the cost of remodeling and evaluate the potential appreciation in the home's value after the work is complete. Balanced against that financial calculation should be the anticipated cost of moving.

Craig Smith, chief executive officer of ServiceMagic Inc., says homeowners need to sharpen their pencils to evaluate the costs and benefits of each possible action.

"The first consideration should be whether they are committed to their neighborhood. A major remodeling job should only be undertaken if you intend to stay in the home for five to 10 years. There is no financial benefit in the short-term for a large project," says Mr. Smith.

On the opposite side, homeowners need to estimate the cost of moving.