Sell and Move or Stay and Improve?

Posted by Gary Hoeferkamp on September 23, 2022.

Everyone at some point, or many points, dreams of a home remodel, whether flooring and painting, baths, kitchen, basement or room addition. Where to begin with so many options, and so much variation in cost. But everything has gone up substantially lately in price, and the wait to get contractors out there so long. Should you just chuck it and find a home with it done already?

I have helped several clients weigh the cost vs return on various improvements, and am happy to do that for you too, whether you are considering a move or not. Do you continue down that road and invest a large sum for a kitchen, lower level, or room addition, or is it time to find a home that better suits your needs, whether that is size, location or needed updates.

Right now, mortgage rates may be playing a larger part in this type of decision. If you are sitting on a 3% fixed term and now looking at a potential 6%+, that can be a large factor. The cash needed for improvements, or the ability to finance it, and how much that will cost is a factor. The sale price of the current home vs cost of the next one, closing costs on both ends and moving expenses. The mess during construction. The hassle of moving. How much you love your location and neighborhood. Below are 4 links to various sites that can help you gather information on various home projects, and if you decide to go about it.

Natl Assoc of Remodeling: Remodeling Done Right | NARI

Natl Assoc of Home Builders: Thinking About Home Remodeling? Start Here - NAHB

Arch Digest Reno Mistakes: 25 Home Renovation Mistakes That Too Many New Homeowners Make | Architectural Digest

HGTV Reno Mistakes: Home Renovation Ideas & Mistakes to Avoid | HGTV

If you decide a move makes sense, then think about timing. This fall and winter are shaping up to be less competitive than the last several years, with home prices leveling out. Next spring I anticipate a new surge of buyer activity as is seasonally normal, and by then buyers will likely be resigned to higher rates, or they may be dropping back down. That adds up to more competition in my view. To capitalize, I believe buying a home in the next 4 months makes sense, then selling in the spring market to catch both ends in your favor. That gives you several months to make some light prep to both homes as well.

Here is an update on current real estate sales activity in STL, all prices, existing single family and condo as of yesterday. I have found this statistic shows the most current state of the market, as it will quickly indicate dropping or rising sales and supply, and hence the direction of the market:

• Manchester has 13 homes available and 29 under contract
• Ballwin has 18 homes available and 52 under contract
• Kirkwood has 24 homes available and 52 under contract
• St Peters has 29 homes available and 87 under contract
• Arnold has 20 homes available and 39 under contract
• Florissant has 64 homes available and 102 under contract

The ratios run from 1.6 to 3 pending sales for every 1 available. Adding the total of these 6 areas is 2.1 to 1. My last comparison in late Aug was 2.3 to 1 (and 2.8 to 1 in late June) with the total number of homes in both categories down again, from 542 to 529. That indicates a continuing slow down in the STL market, with the pending ratio ticking down even into Sept, with total supply also ticking down. I view this now as a trend, as we are coming into fall, and I anticipated activity to pick back up after Labor Day. Ballwin, Kirkwood and St Peters all strengthened a bit, while Manchester, Arnold and Florissant softened a bit. With mortgage rates jumping up yet again this week, and continuing talk of a possible recession, I believe this is having some negative affect on the STL housing market, although I do believe it is short term, and that makes it a good time for buyers over the next 4 months, if they can adjust to the mortgage rates. 

Happy Fall!