Deciding whether you should renovate your current home or buy a new house isn’t easy.

It comes down to asking yourself these big questions:

  1. Am I in the right location?
  2. Can this home make my life easier?
  3. Is there enough space for all our family as it grows?
  4. What is the cost of each choice?

Home prices and mortgages are rising, causing a to a shortage of homes for sale in California.

However, renovations also aren’t cheap. For example, a minor, mid-range kitchen remodel costs an average of $22,000, and a major overhaul costs an average of $66,000. A mid-range bathroom addition costs $18,000 up to an average of $42,000.

Renovating your current home

If you decide to stay put and renovate your current home, the No. 1 thing to do is be organized and have a plan (see blog #2).

The first thing you need to do is make sure the house is safe. That means that, if there are any structural issues or something such as asbestos, it can be taken care of before you get entrenched in the project.

It also means knowing when you have to hire a pro, even if you wanted to do the renovations yourself.

Buying a new home

There are some things you just aren’t going to be able to change about your current house such as, the school district or the lot size or house size. In that case, it may be time to pack up and move.

Another thing to consider is how much money you’ll have to spend on a renovation to get what you want. It may be better to move, instead.

There’s a capped value in every neighborhood for any house (price per square foot). It’s good to have a real estate agent do an assessment of what the value would be after a renovation and then compare that to what it would be like for a house that’s big enough for what you need in a different neighborhood that has more space.

Also, if your renovation goes over the assessed value, you could be in trouble down the road. The easy rule of thumb is, in case of an emergency, if you had to sell the home, make sure that you come out financially positive. Try to make sure that you’re always thinking of future resale value.