This isn't the type of question to which there's a "one size fits all" answer. (Just like most real estate questions, don't you find?) Every situation is different so the best way to figure out which way to go is to analyze your own situation by asking yourself the following questions:
1. Why do you want to move?
If you want to live in a different neighbourhood or city, then obviously renovating isn't the answer. But if it's more space or a different look you're after, then you have to ask yourself this question:
2. Can you renovate your current home to turn it into what you want?
If the answer is no, then once again, renovating isn't the answer. But if the answer is yes, then you have to decide if it's worth your while to renovate. To do this, there are 3 factors you should consider:
If you decide that a renovation isn't in your future based on any of these factors, start packing your boxes because you're moving. But if you're still willing to renovate, you need to compare the renovation option to the moving option, so move on to the next question.
3. For how much will you be able to sell your current home and how much will it cost you to buy the home you really want?
If it's too expensive to buy the home you really want and you've determined that you're okay with renovating, then renovating it is. But if it's not too expensive and both moving and renovating are viable options, then consider yourself lucky to have choices (even if you're feeling a little confused about what to do) and ask yourself the following question:
4. Based on an analysis of their respective pros and cons, which do you prefer, moving or renovating?
Renovating will be more time consuming and stressful, but you'll end up with exactly what you want. Moving will free up more time to do the other things in life that you enjoy, but you may have to make more compromises regarding your new home because you won't be the one designing it. So do a little self-analysis: Do you have very definite tastes or are you willing to compromise? Do you have time for a renovation or is your schedule already jam packed? Are you willing to put up with the hassle of the renovation process (like moving out)?
It's not an easy decision, but if you follow this step by step (or question by question) process, you SHOULD arrive at the decision that'll make you happiest.
As a side note, my wife and I faced this decision a few years ago. We both have very definite tastes, but we also have jam packed schedules and aren't willing to put up with the hassle of a renovation. You'd think we'd have moved, and yet, we somehow decided to renovate (actually, to build a new home, which is more or less the same), probably because our definite tastes outweighed the other factors. I wouldn't say it was fun, but we really do love our home.
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