remodeling costs vs rebuilding costs

Hold the bulldozer! You may want to renovate after all.


A teardown and new construction could leave you happier with your home — and a bit more flush!

Renovating your home could be just the thing you need to make it truly yours. But be careful: This decision could lead you down a never-ending (and stealthily expensive) home improvement rabbit hole. Once you’ve turned your kitchen from drab to fab, for example, your family room now seems out of place, the living room looks dated, and so on. In many cases, tearing down an old home is more affordable than a top-to-bottom remodel, with or without an addition. But not always. It really depends on the home, your location, and your situation. Here are five factors to consider when weighing your options, plus advice on how to make this costly financial decision.

  1. 1. Does your older home have a lot of character?

    Solid-core doors, marble windowsills, crown molding, pocket doors, arched doorways — who could get rid of these features? “Some older houses are made with higher-quality wood and have finishing touches that you can’t replicate today,” says Larry Greene, president of Case Design/Remodeling in Indianapolis, IN. If you want to keep your home’s original details, you’ll probably want to renovate.

    But don’t feel bad if a historical charmer isn’t your thing. Besides, not all old homes are worth saving. “While there are many homes and historical buildings that are 100, 200, or more years old and still in sound condition, typically homes more than 75 years old or so need a critical eye,” says Tim Bakke, co-founder of The Plan Collection, a website dedicated to house plans. “They need to have been very well-taken care of.” Bakke also says to evaluate the utilities, plumbing, and heating systems. If they’re in poor condition, you might want to rebuild. “A teardown will allow you to build with modern materials, and your home will likely be much more energy-efficient,” says Greene. Just make sure that you can tear down your old home. If it’s in a historic district, you’ll need to get permission from your state or local regulator, or from your local historic preservation commission.

  2. 2. Is your home structurally unsound?

    A home on a crumbling foundation is a serious matter. “If your home has structural issues, I would recommend a teardown,” says Greene. But how can you tell? Your walls, when looked at from the outside, should be straight. There should be no water in your basement or crawl space, no cracks on your interior walls, and your windows should easily open and close. A structural engineer can be a big asset in helping you decide. And if you live in an area prone to earthquakes, having the home’s foundation checked becomes even more important. “In some cases, a home that was designed and built prior to new earthquake laws can have significant structural damage after an earthquake occurs,” says Richard Frazao, president of Quaketek, a Montreal, Canada–based company that makes earthquake protection for buildings. “In those cases, it is often more economical to start from scratch.”

  3. 3. Does your town have restrictive regulations?

    The decision on whether to renovate or rebuild might not be completely yours to make. If your jurisdiction has tough regulations, it might be easier to play by its rules. “In places where you’ve got a lot of rules, its almost never better to tear down,” says Juan Diaz, a San Francisco, CA, real estate investor. “In the Bay Area where I operate, it’s so much faster to get city approval for a project that involves leaving the existing house and tearing it down to the framing timbers. That’ll get you approval in one month versus one year for a complete teardown.”

  4. 4. Is there water damage?

    Homes and water don’t mix. Unfortunately, water damage in homes is a common problem, from burst pipes to water accumulation in the basement to flooding after a storm. Sometimes the damage is so severe, it can warrant a renovation or complete teardown. But how can you know what to do? “If a few feet of the first-floor sheetrock is waterlogged, then stripping the lower half of the walls of sheetrock and insulation and replacing them will get you by for a renovation,” says Bakke. “But where water has invaded the house, say past the first floor, the damage to various parts of the house will be so extensive that a rebuild will be the smartest way to go.”

  5. 5. Finally, how much money do you want to spend?

    Sometimes you just need to crunch the numbers to determine which path to take: Renovation or teardown? The trick is getting the numbers right. Once you start renovating and ripping things apart, you might discover some unwelcome surprises. “Anyone who has ever done an expansive renovation project will tell you that the final cost is always higher than anticipated,” says Phil Eby, owner and president of Eby Exteriors Inc. in Akron, PA. “There are always unexpected costs such as excavating surprises, unseen rot and mold, electrical issues, structural inadequacies, etc.” Eby advises to choose a renovation only if the remodeling costs will be considerably less than new construction or if you wish to keep historical attributes. A teardown and complete rebuild is typically an easier and more straightforward process.

So, whether to renovate or teardown and rebuild really comes down to a case-by-case decision. Call in the proper professionals for quotes to help you decide. Renovation experts, builders, structural engineers, and architects can all help you make this decision based on what you want to do, the type of home you have, its condition, and your local zoning rules.

Have you explored remodeling costs? Would you choose a teardown or remodel? Share in the comments!