When deciding between a home renovation and buying a new house in Minnesota, your decision weighs factors such as cost, size, location, and neighborhood. In Minnesota, there is low availability of homes on the market, making remodeling your current home an attractive option. If you go the buying route, you can put money towards the design and remodel of the house.
The Minnesota Housing Market
On May 16, 2022, the Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS® announced the median sales price for a home increased 10% from 2021 to $370,000. They claim this increase is due to several factors:
- Historically low interest rates throughout 2021 and early 2022
- House inventory has dropped 9.2%
- April 2022 was the 25th consecutive month of inventory decline
- New and existing home sales fell by 3.5%
To add to the historic competitiveness of buying a new home in the Twin Cities, the Federal Reserve is increasing interest rates due to high inflation across the country.
Buying a new home in the Twin Cities right now is as tricky as ever, and it isn’t the best move for your bank account either. That’s why many residents are considering renovations to their current homes.
So, is it cheaper to renovate or buy a new house in Minnesota?
By grouping renovations into three categories — low-, mid-and high-end — you’ll see that remodeling is always the cheaper option than buying a new home. Here’s the average cost for a whole house remodel:
- Low-end: $50,000 – $40,000
- Mid-range: $40,000 – $75,000
- High-end: $75,000 – $250,000+
A simple rule of thumb to follow is the price of an average whole house renovation is $15-60 per square foot.
There is a wide range with these numbers. Contact an interior design firm to provide a clearer picture of what a renovation will cost you to give a more precise estimate. It’s not always about costs.
If you love the neighborhood or school district, you live in, renovating makes the most sense, rather than moving to a new house. If your home is situated in an older neighborhood, you have the added value of being surrounded by beautifully grown trees that offer shade during hot sunny days. More senior developments tend to sit on larger lots creating spacious front and back yards. Unique architectural features are found in older homes, providing more charm and character to the house’s overall look. We’d recommend keeping the house’s original structure while making modern-day or contemporary updates to the inside.
Older homes do have drawbacks that can lead to buying a new place. Aging homes require a lot of upkeep and fixes. Unexpected home repairs, like plumbing issues, can be stressful and costly. The piping in an older home can break down over time due to rust and become faulty. Electrical concerns are common in houses built before modern safety standards were around. Deteriorating roofs in older homes can lead to other problems, including leaks, insulation, and water damage. Repairing a roof is not cheap but will be necessary for aging homes.
Is it worth buying a house that needs a lot of renovation in Minnesota?
New homes tend to have much smaller offerings for the size of the lot, plus the houses are situated close together and lack privacy. More recent houses have less personality and miss that old-school charm that older homes can offer. Unless you’re building a brand new home, you’re not going to get everything you dream of when buying a new place. You will likely pay a high premium to purchase a home, and many houses will still need remodeling. Several of our clients look at what they can get for a newly constructed home and realize the quality is not what they would expect for the price point.
Considering a home renovation but unsure of what your next step should be? Get in touch with our team today to chat about our process and renovation ideas for your house!