Should you build new or renovate your home?
Deciding whether to build a new home or renovate your existing one is a major decision — and one of the first choices you’ll make in the home construction process. Both options make sense in certain circumstances. Your budget, timeline, and the scope of what you hope to change all play a role.
This post looks at the key differences between building new and renovating. Our goal is to give you a better sense of what’s involved, the key factors to consider, and how to decide which is best for you. At the end, you’ll find a great planning resource to help you take your first steps, regardless of which option you choose.
Building a new home
Building new allows you to create a space that matches your needs and style perfectly. It’s a good choice when you want a completely customized home, or when your current home fundamentally doesn’t work for you.
Here are some of the key things to consider as you decide whether to build new:
Higher costs and longer timelines: Because you’re starting from scratch, building a new home is usually a much longer and more expensive process than renovating. (The exception: very large and complex renovations).
More control, fewer surprises: Building a new home comes with fewer unknowns compared to renovating. This means more control and predictability when it comes to costs and timelines. A new build also gives you more control over design because you’re starting with a blank slate.
Lots of hires: New construction calls for a large team of pros that often includes contractors, architects, engineers and interior designers. This is good because you’re bringing in experts rather than trying to DIY. However, it also makes things complex. As the homeowner, you’re the CEO of this project — which means you need to be prepared to work with all of these specialists and their teams to get it over the finish line.
Permitting and planning: Any new construction will need extensive planning and permit approvals from your city. This means longer timelines, but it also gives you the confidence that every part of your home is up to date with the most current standards.
Financing: Financing can be easier to secure for a new build than for a renovation.
Renovating your home
Typically, a renovation makes sense when the “bones” of your house (foundation, structure, and roof) are in good shape and you want to preserve its existing character. It’s also a good option when working within the limits of your current home meets your needs better than moving.
A renovation project can range from a simple update to a massive remodel — and your budget and complexity will vary with it. A smaller reno will be quicker and less expensive than starting from scratch. Larger projects, less so. (Read about the three different types of renovation for more on this.)
Here are some of the key things to consider as you decide whether to renovate:
Scope of work: The less you change in your home, the more you’ll keep your costs and timelines in check. Making structural changes or adding square footage can be just as complicated, expensive, and time-consuming as building new, if not more so.
Hidden issues and surprises: If your team uncovers structural or code issues during a renovation, you must bring these up to current code — no matter the cost. This includes framing or asbestos issues, outdated plumbing or electrical systems, and more.
Cost uncertainty + contingencies: Because of the hidden issues and surprises we just talked about, renovations carry a lot more uncertainty around costs and timelines. I recommend building a contingency fund (typically 15% of the total estimated cost) into your official budget AND maintaining another “personal contingency” of 15% to help cover scope creep and other surprises.
DIY vs. hiring the pros: Thinking you’ll save money by doing things yourself often doesn’t work out as well as homeowners expect. In fact, it may cost more than just hiring someone to do the job from the outset. Be realistic and plan extensively before you jump into DIY. You’ll save yourself a lot of stress and headache in the long run.
Grandfathered codes: "Grandfathering" gives you an exception to current building codes around the size or location of your home because it was there before the rules came into place. New buildings don’t qualify for this but your renovation might.
Build new or renovate: Key factors to consider as you decide
Time
New builds generally have longer timelines because they require comprehensive planning and permitting. Renovation timelines vary wildly, depending on how much work needs to be done and how complicated the project is.
Regardless, home building projects almost always take longer than you think they will. (Yes, even the simple renovations.) Be realistic. Give yourself more time than you think you’ll need, and don’t expect any quick turnarounds.
Cost
New builds are generally more expensive than renovations because the scope of work is so much bigger. This means that your up-front costs will likely be higher.
But renovations come with a lot more uncertainty around costs. You will need a much larger contingency budget. You’ll also need to be comfortable with things changing quickly and unexpectedly.
From a cost perspective, the most volatile kind of construction project is a large-scale renovation with structure changes or new square footage. This combines the unpredictability of a renovation with the most expensive parts of a new build (permitting, structural changes, long timelines, lots of complexity and workers to hire). A well-qualified contractor is especially important on a project like this to help you manage the risk and make smart decisions.
People
Speaking of contractors, the size of your team is a major deciding factor in choosing between a renovation or new construction.
Building from scratch takes a huge team and comes with a hefty price tag. A renovation typically involves hiring fewer people, which lowers your budget.
HOWEVER. Hiring the wrong people or thinking you can do it yourself when you don’t have the experience or skills is a recipe for disaster… expensive disaster. Please be realistic about what you’re capable of and where you need to bring in the pros. And if in doubt, err on the side of caution and leave it to the experts.
Scope
There are two parts to the scope conversation when it comes to home construction:
The original scope of work: What you said you would do when you started the project
Scope creep: Out-of-budget additions to the project. This can happen because of surprise issues we’ve already talked about, like fixing outdated plumbing. It can also happen when homeowners don’t properly plan and decide to add or change things at the last minute. For example, extending your flooring into the living room when you thought it would only be the kitchen, which means you need to update the baseboards, which means you need to repaint, and so on. It’s the worst kind of domino effect.
New builds have a large original scope of work, which is why their up-front price tag is so much higher.
Renovations often have a smaller original scope of work that expands due to unforeseen issues or poor planning. This is where the majority of cost and timeline issues happen.
Both build types are vulnerable to last-minute “while we’re here” additions to the scope of work. The good news is that you, as the homeowner, have control over this. Strong pre-planning and careful budget management will keep this to a minimum.
Think carefully about the scope of your project before you decide whether to renovate or build new — and be prepared to stick to that scope once the project gets underway.
Planning
On the face of it, new construction requires much more planning than renovations do. Hiring the right contractor and architect can be a huge help here — but there's still a lot for you to manage as the homeowner.
You’ll need to get permits and permissions from your city. Note that every jurisdiction will have their own regulations and nuances, so check with your local building authority to get specifics.
Your HOA (Home Owners’ Association) or other local bodies might also need to sign off on parts of your build.
Here’s my spicy take: You should plan just as thoroughly for a renovation. Many homeowners are afraid of taking on a renovation because they either don’t know where to start or are afraid of the unknowns. This is where proper planning and advice from qualified professionals can have a huge impact. You might not be able to get ahead of every surprise, but you’ll have thought through potential challenges before they arise and have a plan for when they do come up.
Key takeaways
Planning ahead is the best decision you can make: Whether you’re building new or renovating, planning ahead is the best way to manage costs, timelines, and unexpected issues effectively. Download our free Home Building Checklist below for help with this!
Understand the costs and timelines: New builds generally have higher upfront costs and longer timelines but offer more control and predictability. Renovations can be less expensive initially but often come with hidden issues and cost uncertainties.
Don’t assume that the DIY approach will save you money: I understand the appeal of taking on more of the work yourself, especially when the budget is tight. But there’s a lot to be said for hiring a qualified contractor in a renovation. Their expertise, knowledge of the process, and ability to do it right the first time will very likely save you money and stress in the long run.
