Should You Remodel or Rebuild Your House?

Home interior renovation

 

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If you own a house that "needs a little love" (as you often see in real estate listings), you might be wondering whether to spruce up the existing house or to tear it down and start over. This is a big decision that requires careful consideration. To make the right choice for your budget and needs, start with a few questions, then take a hard look at what you hope to achieve, the condition of your existing house, and local laws that may affect the project.

How Long Will You Stay in Your Home?

If you plan to be in the house for the long-term and then sell it, it is usually wiser to tear down and rebuild, at least from a purely financial perspective. 

Physical elements of a home are on a timer. The minute the hammer strikes your house for the last time, that timer starts ticking. Exterior paint might last up to seven years, but more like five years in inclement climates. Dishwashers last less than a decade, central air conditioners last about 10 to 15 years, and three-tab composite shingles are good for about 20 years

On top of that, while some elements' lifespans are staggered, many others expire at roughly the same time. In terms of cost, replacing a dishwasher is nobody's idea of fun, but just imagine having to do that in the same calendar year that you replaced your roof, gutters, and central air conditioner.

By rebuilding, you reset the clock in terms of the house's physical nature: everything from the appliances to the house's envelope (e.g., roofing, siding, etc.). When it comes time to sell 15 years later, you're selling a 15-year-old house instead of one that is 40 years old. As a bonus, you had the pleasure of living in a new house during those 15 years. Buyers are intimately attuned to the age of houses—if they aren't, their real estate agent and house inspector will make them well aware of this fact.

How Much Do You Want to Spend?

If you're tight on money, remodeling is always the way to go. The issue is scale—your ability to scale your spending up or down (or freeze it), according to your needs and resources. For example, you can start by remodeling a bathroom then move onto other rooms as your budget and time allow.

Alternatively, the tear down and rebuild option is all-or-nothing. After your first big purchase—the demolition—you're left with a vacant lot, committing you to build the new home. Unless you want to be the owner of a vacant lot, you must keep moving forward. The worst thing is to have a house that is partially complete because structures left exposed to the elements age quickly.

Choose Between Better or Cheaper

If you want better, tear down and rebuild. If you want cheaper, remodel. Even a wide-ranging whole-house remodel will still be cheaper than tearing down and building anew.

According to Roger Greenwald, RA, AIA, "the cost of tearing down and rebuilding will be about 20 percent higher than engaging in an extensive whole-house remodel. But the architectural benefits of tearing down and working with a clean slate can be huge: Better fundamental architectural design, all new systems, clean circulation, high-quality windows, new and efficient heating and cooling systems, tall ceilings, and space designed for your personal living patterns placed where you need it."

Determine the True Condition of the House

While all houses can be remodeled, not all houses should be. Industry professionals generally agree that the following conditions merit a tear-down/rebuild, or at least swing the argument further in that direction:

  • Desired improvements cannot be contained within the existing house footprint. Thus, you want an addition. The need for additional space is certainly not the only reason for building anew; additions get built all the time. The issue is that it happens in conjunction with extensive, expensive remodels of the existing house—a double draw on your funding.
  • The foundation is bad and requires a lot of work before the house can be remodeled.
  • Are ceilings too low for your liking? It's no simple matter to raise a ceiling—unless there is plenty of empty space up there. The floor above must be removed and then rebuilt.

Be Aware of Zoning Restrictions

Zoning laws govern the type, size, and location of buildings on any property. In urban and many suburban areas, home rebuilds often are restricted to the footprint of the original house. In other words, you can't tear down a small house and put up a mansion. Zoning laws also may restrict the height of a new house, so you may be limited to not only the old footprint but also to a one- or two-story structure. Additionally, laws may not allow rental properties in many zones. If you'd like to build an addition or carriage house to use for renters, this may not be allowed.