My experience was that it'd be more cost effective to buy an existing bigger home -even if 300 or 400 K more than we payed for ours with a plan to add on to it which we did (we had to gut it too, in order to add on to it properly. The addition is seamless, is but 200 sq f and allowed us a lot of improvement-much more than one would expect from 200 sq f. We had to provide blueprints, pay permits, pass 6 inspections, and the remodel took two years.. more if one counts since purchasing the house. Obviously we lived in our old place, so two mortgages to carry. At some point we also started renting a place for MIL. )

It's true though that we were very limited in our search as we needed walking distance-we'd sacrifice something important in any case as true walking distance is huge scarcity where we live.

But looking back-I'd rather sacrifice money. Than anything else.

I suspect though these things vary locally, and every family and its unique set of needs and amount of resourses-money, time, energy, health, etc.

In the short term or in the long run?

(actually make it 500K more lol, since I've a feeling forgetting details is a bliss in our case, and we didn't start on hardscaping/landcaping backyard yet=and one has too when one expands, digging new foundation and all. It's a small lot, and we'll touch it only partially-yet we already got a very vague quote of 40 K..that is, if I'm giving up on a pool, and I'd probably give up on it)

I suspect that this question really can't be answered in any meaningful way without very specific information.

In general, buying an existing home is cheaper than building a home, however, renovating is much more expensive than building. So the question becomes at what point are the costs of remodeling greater than the savings from buying existing, and the answer is simply not that concrete.

For starters, some homes lend themselves to additions much better than other homes. Siding vs. brick, crawlspace vs. slab, etc.

Additionally, there is the location problem. While it might be cheaper to build a house on an available lot, the total cost of ownership for a more suitably placed home might be lower. Parks, schools, groceries, etc. within walking distance will often make a house more suitable and lower commuter costs sufficiently to make up for the marginal costs of remodeling. Not to mention general quality of life issues when the location of a home enhances the way you live.

Finally, depending on location, lot development can be a pretty important consideration. I have personally paused my home design as I labor over an extraordinary piece of property. It is absolutely everything I want, however, it is going to cost me seven figures just to develop the property into something I can build a house on, so those costs can be significant if no satisfactory lots are available.

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As others have said, assuming there is a satisfactory larger home available, it will always be cheaper to find a way to acquire that rather than remodeling, however, if nothing works, you might not have many options. At some point a tear down starts making a lot of sense.

I suspect your friends are actually naive about the costs of remodeling and are overvaluing the infrastructure available. However, we should allow that, that might not be the case.

We came out ahead by doing a virtual teardown that was called remodeling at the time. (Foundation, chimney and one garage stall were left standing.) That ship has sailed; today it would be a teardown, with more permits required.

We got location, mature landscaping, and an all-of-one-piece *new* house. We didn't live through remodeling or have a partially new result that cost more than it was worth. I'd think a hundred times before doing significant remodeling of any SFH that wasn't historic -- and I don't have pockets deep enough to wouldn't do historic.

I used to buy, renovate/rent and eventually sell 100-year old downtown homes. Until a new-home-a-year builder friend said, "r u nutz"? To paraphrase my friend Forest, "Old homes are like a box of candy that's been sitting in the sun too long, looks pretty, rotten to the core."

worthy's coming teardown

(Good thing old homes are inanimate...at least, I hope so!)

It depends. If the house is in the neighborhood that one wants and empty lots were last built on 45-50 years ago, then one doesn't have a lot of choice. In such neighborhoods, one rarely has to think about wells/septic - it's town water and sewage all the way. Electrical? A box will undoubtedly have to be added or the box replaced - you are adding usage. This is really not a big deal or that expensive.

Much depends on the house to be remodeled. It's far easier to remodel a house with a basement and all the HVAC/pipes/electrical exposed. A crawl space, is 2nd, a slab will be harder.

Is this an addition or a total gut job? And addition, if there is a flat piece of abutting land, is not hard to do, and a good architect can co-join the roof lines appropriately. Total gut job? It depends on whether all load bearing walls are also being removed and hidden beams added - that is costly.

One must look at an existing house and figure out how to get plumbing to an addition (if it is going to be needed), and duct work. In my house, I added a full dormer on the 2nd floor, and also wanted a separate HVAC system for this floor. Easy - ducts went in the attic. There were walls where the pipes for the new bath could easily come up from the basement.

The key is not to buy a house and ASSUME it will be easy to remodel. I know - sometimes in a hot market, one might miss out on a house because of no time to get a contractor there and multiple bids. Let it go unless the ease is obvious to an untrained eye.

I like living in an established (minimum 70 years old) neighborhood. Empty lots rarely show up in these.

I have lived in a home built in 1884 and now in a new home we built. Cheaper? Neither one. But.. in the old house dealing with out of plum walls, uneven floors, old wiring, old plumbing, energy inefficient heating + windows + doors. New is better, not cheaper, but peace of mind and a hell-o-lot less maintenance was worth it. The old house was 'charming' but the new one is passive solar, with a solar hot water system, radiant heat floors (upstate NY), bright & sun filled rooms in the dead of winter.. and no more 'crap...what happened now' thoughts come in mind. The surprises are few, the benefits are many. Efficient building products available now are worth every penny.

Extensive remodels cost way more per square foot than a new build. When you get to 40-50% of a home being remodeled, or something difficult like adding a second floor, it’s always cheaper to buy the more expensive existing house than to try to “fix” what’s lacking in an older home. Or to build it.

Buy the 900K house that’s perfect rather than trying to build a new 800K house that ends up with 200K overruns because of upgrades, hitting rock, and market fluctuations of commodities.

When we started our build we were open to either a new build or an older home that needed a gut job and floor added. At the time we were quoted 1.2 for new Home and 7-850k for gut and add floor. So far that has been accurate for new build so I assume would likely be for Reno too. Only major difference is that in a Reno you come up against unforeseen things more so I think it can skyrocket quickly. A friend did a down to the studs job and they are at 1 million for the Reno which is 200k more than they expected. These numbers exclude cost of lots. Also are very general obviously but gave us something to think about.