June 1, 2021
To Renovate or Build New – That is the Question Should you renovate your home or tear it down and start fresh? Sometimes the answer is obvious, but often it is nuanced and requires judgment and experience to make a sound decision. Turnstone’s roots are at the Delaware beaches, where the soaring value of coastal land has made the “renovate vs. tear down” decision something we deal with all the time. For many owners, having a quaint little cottage sitting on a parcel of land that is worth $1,000,000 or more just doesn’t make a lot of sense. As new, larger homes gradually surround the cottage, their choice becomes even clearer. But there are many advantages to renovation that must be considered before you schedule the wrecking ball. We tapped the collective expertise of our most seasoned professionals to gather the factors that should be considered when facing this important decision. In the end, each situation is unique, and no generalized advice is sufficient to the task. One caveat – if you are passionate about the historical significance or authenticity of your older home, this blog post is not intended for you. Assuming your home has a solid foundation and “good bones”, you are going to renovate it, and we would be thrilled to assist in that endeavor. First Things First It helps to start with a wish list of the attributes that are important to you, categorized by wants, needs and must-haves. This is a great mental exercise that prioritizes what matters to you, unencumbered by the practical limitations of a renovation. Based on this list, Turnstone can provide you with a rough idea of the cost to build new vs. the cost to renovate. It’s key to know what financial ballpark you are playing in for both options. We can also estimate how long the renovation or new build would take. The Factors Note: Some factors are only relevant if you are close to the coast or inland bays. Factors that favor renovating your home: · Your home has a solid foundation and framing, and you want to save money. · You are satisfied with the square footage in the existing building footprint. · Improving your home in phases works better for your budget and/or lifestyle considerations. · You’re in a hurry. Renovations are generally faster than new construction. · The design you contemplate does not involve major changes in how structural loads are carried. · Your home has non-conforming setbacks and/or a floor area ratio. You may lose square footage if you demolish because more restrictive Codes and lot coverage limitations may apply. · You have other non-conforming structures on your lot that you want to keep. · Less than 50% of the home requires renovation. · You are not bothered by the prospect of living through a renovation, or you have an alternative temporary housing option. · The air quality, HVAC functionality and energy efficiency of your home are not a concern. · The lot cost and rebuilding cost combined would greatly exceed the market value of the new home. · Your home has characteristics that would be very expensive to recreate – i.e., an all brick or stone exterior. · You live in an area where applying for a renovation building permit will not trigger a reassessment of your home’s value by taxing authorities. · The cost of demolition and disposal is very high in your area. · Crazy high lumber and steel prices make rebuilding too expensive. Factors that favor building a new home: · You just want to live in a new house! You want modern amenities like an open floor plan, high ceilings, large closets and bathrooms, better air quality and energy efficiency, etc. · Your foundation and/or floor systems are approaching the end of their useful lives. · Your foundation would not support the load of adding a floor above the existing space. · The applicable building authorities will require you to meet contemporary building Codes for energy efficiency, fire safety, electric wiring etc., as a prerequisite for issuing a building permit. · You place a high value on having a virtually maintenance-free lifestyle for many years to come. · “ Aging-in-place ” is important to you. Many of the recommendations for successful aging-in-place construction are harder to achieve with a renovation. · The property was purchased for “lot value”. · The potential market value of a new home is much greater than the value of a renovated home. · You will need to renovate more than 50% of the home. · You are passionate about energy efficiency. · Your home has asbestos, lead paint or other hazardous materials. · Your existing floor plan is radically different than your desired floor plan. · Your home has aging components not directly related to the renovation. By rebuilding, you get to reset the clock on expensive repairs and replacements for many years. Think roofing, siding, paint, appliances, water heaters, the HVAC system, among others. It might be that building new is not that much more expensive than the cost of a renovation plus the cost of replacing obsolete components as they wear out. · Your lot is prone to flooding or you are concerned about sea level rise and want to elevate on pilings. While not an issue on the East coast, people in western states need to take into consideration resistance to wildfires and earthquakes. · There are desirable (and valuable) potential views that can be captured by building up. · You need budget certainty. Renovations require a larger contingency factor because there are simply more unknowables. Once your home is under renovation, you usually don’t have any choice but to pay up for any unexpected costs that may arise. · If you want to add a swimming pool and the existing home is non-conforming, you may have no choice but to build new in some jurisdictions. Other Considerations: · Do you want to live in the home while it is being renovated? Think long and hard about that question because living in a home undergoing major renovation can be extremely inconvenient and stressful and can slow down the pace of the renovation. It’s loud, dusty, dirty and workers are constantly coming in and out, generally at the least convenient time for you. Can you live with a microwave and a coffee pot for weeks on end? · If you have an HOA with permitting and/or architectural review powers, start talking to them early on to gain an understanding of how they approach renovations, demolition and new construction projects. Are there restrictions in the neighborhood, such as following a specific architectural style, roof type, or color scheme? · It may be tempting to convert your garage to additional living space. Talk to a Realtor before making this decision, as a garage is sometimes more valuable upon resale than the additional living space. · When doing your budgeting, don’t forget the furniture. Your luxurious new home or freshly renovated spaces will be screaming for new furniture to finish off the look. · Beware of companies offering large charitable contributions for components of a demolished home. The IRS is cracking down hard on perceived abuses in this area. Most of our clients who study the issue decide to tear down and build a new home. The tear down and rebuild option is all-or-nothing. After your home is demolished (not an insignificant expense) you're left with a vacant lot, committing you to build the new home – NOW! But, by rebuilding, you reset the clock on all those aging systems and appliances. When it comes time to sell, you’ll be selling a home that is still in good shape and has the modern amenities most buyers prefer. As a bonus, you had the pleasure of living in a new home all those years! Turnstone is available to help you assess these factors and reach the right conclusion for your situation. Whatever your final decision, we would love the opportunity to help you plan, design and execute your dream home or renovation.