Buying or Renovating

Homeowners are faced with a dilemma not uncommon in today’s real estate market.  Should they renovate their beloved but outdated home, or take the plunge and buy or build a new one?

In Pittsburgh and nationwide, a growing trend is emerging as homeowners increasingly opt to renovate and build additions to their current homes rather than venture into the competitive housing market. This shift is largely driven by the current high interest rates, which have made moving to a new home a less attractive option for many.

However, that doesn’t mean that renovating is right for everyone. Plenty of local families are choosing to sell their existing properties in favor of newer homes with desired amenities.

“Buying new is not only an economic decision but also an emotional one,” said Malini Jaganathan, a real estate agent with Howard Hanna’s Wexford office. “While many homeowners are locked in low pandemic interest rates of 2 and 3s, I also see them wanting to make a move if the space is insufficient and the style is outdated.”

Jaganathan said homeowners tend to evaluate if the current home can be made to work because buying new means shifting to a much higher interest rate and likely spending more. “However, many of my clients with young children tell me that if they move to a bigger and modern space now, their children will enjoy the home longer.”

Emotions play a bigger role in making the decision than most people realize, she said. People with busy lifestyles struggling to balance jobs and children’s schedules may not have the appetite for renovating. “The higher interest rates are getting normalized to some extent. I say, marry the house and date the rate. Refinancing is always an option down the road.”

Before deciding between buying and renovating, Jaganathan said she advises homeowners to do two things.

First, find a reputable contractor to provide a price estimate for what it would cost to renovate or build an addition to their current home. “Then, talk to a trusted realtor so you can understand what kind of value you will get for your current home in the future if you invest money into renovations or additions now.”

Not all home remodels yield the same return on investment, she warned. For instance, if a home is already the most expensive in its neighborhood, increasing its value with an addition or other upgrades makes it unlikely the homeowners will recover those costs. “Not everyone cares about that, but if it’s important to recoup the costs, they’ll want to know if that’s possible.”

Another factor that can affect the return on investment is location and the demand for the upgrades made, Jaganathan said. Trends can change over time, so what is sought-after now may not be popular years down the road when homeowners are ready to sell. “How much has the trend changed from the time of renovations to the time of selling?” she said. “It’s a very subjective question. Never go in thinking you’re going to get all of it in return.”

Teri and Greg Thomas of Blairsville decided after careful consideration that buying a different property and selling their current home was the best decision for their circumstances. They were looking to downsize to a home that would allow them to age in place.

Their new home is half a block away from their daughter, which helps them achieve their goal. It also comes with amenities and features their current home lacks. “This home has a garbage disposal, laundry chute, and stair lift for future use, plus is completely updated,” said Teri Thomas. “It needs nothing. Our remodeling days are over.”

Another deciding factor between renovating or moving is their current home is valued at more than they paid for their new location, allowing them to come out on top once it sells, she said.

Even if homeowners want to sell and look for something else that meets their needs like the Thomas’s did, it may be difficult to find what they’re looking for within their desired price range. As has been the case for the last four years, inventory is slim in some real estate markets. Data on the Pennsylvania housing market from Innago suggests that—especially in Western PA—there is an increased demand for housing based on population growth trends for the region. This could further incentivize homeowners to invest in their current properties rather than enter a competitive buying market.

The Joint Center for Housing Studies at Harvard University estimates that about $450 billion was spent in 2024 on owner-occupied home improvements. The center predicts these figures will continue to rise in 2025, indicating a continued trend toward home improvement over relocation.

For those who decide to stay in their current homes, working with a reputable builder can help achieve the desired upgrades within budget.

Dan Meade, founder of Prime 1 Builders in South Fayette, said additions to existing properties are popular right now. The most common reason he hears from homeowners seeking his services is the need for more space. “So, what do they do? They go out and start looking for homes that meet their needs in their price range,” he said.

Meade said he agrees with Jaganathan that cost plays a major role in whether homeowners renovate or buy another home to get the amenities and features they want. In his experience, it’s usually less expensive to update than buy new because you’re avoiding costs associated with moving. “Even doing an addition, it’s still going to come out less than buying or building a new home.”

However, that doesn’t mean that renovating or building additions can’t be costly. “Lots of people have grandiose ideas and when they call and I speak to them, they have no idea what the cost is involved,” said Meade. “It all sounds good and then I come out and speak to them and give a cost estimate and the size of their project may shrink. Usually, once they see the line items with the cost, most people scale down.”

Kitchen and bathroom upgrades are the most popular requests right now, Meade said. “But the biggest thing is expanding living space and then with that, it’s usually the master bedroom and bath.” Garages are another popular request, as are home offices. “When COVID hit, everyone needed more space,” he said. “It’s definitely slowed down, but when people are doing these renovations, they would still put in an office if it was a choice.”

Another trend he’s still seeing is a desire for open floor plans. People also want home theaters and appliance upgrades to more high-end appliances when they do kitchen remodels. “People want to do more with media when they update their homes, especially modern TVs that can handle surround sound and higher quality video,” Meade said.

During the pandemic, the availability of building materials was an issue because of supply chain interruptions. “Availability of materials does not seem to be a problem any longer,” said Meade. “But the cost of materials has gone up 35 to 40 percent.”

Most of the homes he renovates or builds additions on are older, which can present a few challenges. “The biggest challenge is that homes are smaller to start with, with smaller lots that pose huge problems for access of equipment to get in and do the job,” Meade said. “And you have to be very creative with the space to get the most bang for your buck.”

Some of his projects end up scaled back because the lot isn’t large enough to accommodate the homeowners’ requests.

Another issue is balancing the desire to preserve a home’s character with the need for modern amenities. Meade said his goal is to integrate the new with the old, being sensitive to the existing design, both in the interior and exterior. A recent three-story addition he did on a Mt. Lebanon home wanted to preserve an original brick wall while modernizing the space a bit. Meade opened it up and installed a wet bar that’s open to the kitchen that uses the brick wall.

One trend he’s not seeing much right now is building or renovating with brick. Meade chalked that up to the expense of brick. Most of his customers choose a stone façade and vinyl instead to keep costs down.

Whether cost is an issue, Jaganathan urged homeowners not to decide about renovating versus buying a different property by themselves. “As an owner, you are focused on your home, but you don’t necessarily know about what’s out there, the trends, and the future value,” she said. “Talk to a contractor and a realtor to understand all the pieces of the puzzle before you make a decision.”  NH