Trying to decide between starting your home renovation now or waiting to see if prices go down is a lot like choosing between two checkout lines at Whole Foods. You have to assess not only how full the carts are of the people in front of you, but also does the cashier look like a speedy one, who is doing the bagging, and does the person buying the groceries look like the type of person who is going to ask about the price of every item as the cashier rings it up.
You know you have to choose one to stand in, and once you’ve chosen switching to the other will just be counterproductive. It seems like no matter which one you choose it’s the other line that moves faster.
There are a lot of moving parts that will have an impact on the overall cost of renovations. Interest rates, inflation (plus programs to reduce inflation), and continuing supply chain delays are all factors. Some experts believe that higher interest rates causing real estate sales to slow down will increase the number of renovations.
The math makes sense – anyone who won the mortgage lottery and was able to refinance in the fall of 2021, factoring in current interest rates is likely to keep them from moving for a while (even if they want to). Keep the 3% mortgage and get a HELOC for the renovation is a lot better than getting a whole new home with a 7% mortgage rate – especially as the new home will likely need some work too.
An important consideration that is too often overlooked is the time-value of money. Not to get into the weeds, but a dollar today is worth more than one tomorrow (and no, we’re not just talking about inflation). In home renovation terms, each day you put off building the home of your dreams is another day you will not be enjoying where you live to the fullest.
To think about it another way – let’s say you have young kids at home, 6 & 8 years old right now. In 12 short years, you will have spent 95% of all the days you will ever spend with them already (that’s on average, obviously. Some parents do get more time with their adult kids than others). Waiting another summer before building the perfect backyard with pool and outdoor kitchen is a large amount of time together not being spent the way you would like it.
Could you save $50,000 by waiting? Maybe – but it might cost more next year too. But the one thing we know for certain is you won’t get the time back.
In the end, it’s Shakespearean – to wait or not to wait. If you’d like to talk specifics about your dream project and get some real numbers let’s do it! We are always happy to walk you through what the process will look like from conception to enjoying your new home.