Build or Buy?

Today’s realities mean it makes more sense to buy (and renovate) than to build

These are interesting times in Calgary’s residential real estate market. Rising interest rates, a large inventory of pre-owned homes for sale, and a slowly recovering economy have all had an impact on housing and the decision as to whether one should build a new home or buy an existing home and renovate it to your taste.

A recent experience with a client best speaks to this decision and is worth sharing.

About a year ago, I was contacted by former clients looking to build their dream home. They were looking to acquire more space in their current home, and with teenagers in the house, they were ready to move closer to the core and enjoy a more urban lifestyle.

So with a team of building professionals – an architect, engineer, and interior designer – we began working collaboratively together to develop building plans that reflected the vision and taste of my clients. The result of our pre-construction planning was a drop-dead gorgeous bungalow with a decidedly mid-century modern aesthetic. We all loved it. There was open space and a large master-suite on the main floor and lots of room for the teens in the basement. 

With a great set of detailed drawings in-hand we began to create a construction budget inclusive of the client’s selections.

My clients wanted an inner-city lot in a reasonably desirable area and they would need to demolish the existing home to build new. The cost of the lot and the budget to build the home far exceeded the average value of homes in that particular area. To be this far out of the neighbourhood’s value wouldn’t be a smart move, so it was back to the drawing board.

We worked with the same team to reduce the scope of the build with everything on the table. Architectural details were removed, structure was simplified, landscaping was made less costly, interior finish selections were downgraded – we looked at everything including the kitchen sink. 

Proud of our accomplishments, we reworked the budget expecting the cost to build the home to drop dramatically. Hoping to decrease the cost by about a third, we were disappointed when we had found only a 15% reduction in the cost to construct the home.

On learning this and losing some sleep, my clients began to drive around highly desirable areas noting all of the ‘For Sale’ signs. I connected them with trusted realtors, and they were shocked by the relatively low asking prices. While finding the exquisite mid-century bungalow of their dreams wasn’t going to happen, there were several substantial homes in beautiful, mature areas within walking distance to downtown and hip urban streetscapes. In the face of this option, why would you build?

My clients landed on a potential home and felt like they could get it for a remarkable price. We sat down together over several cups of coffee and discussed how the home could be renovated to meet most of the objectives we had in designing the home build project.

Updating windows, fully modernizing the bathrooms and kitchen, and removing some walls to create large spaces were all part of the renovation vision. And all could be done in keeping with their budget while ensuring the cost to renovate didn’t exceed the resale expectations and values within the neighborhood.

There’s never one right answer but in the reality of our current market, I’d advise looking closely at the real estate market to explore your options. 

If you’re interested in exploring further, I’d love to help. I often tour homes with clients and realtors prior to purchase so they are sure of their options before making a commitment. Give me a call at 403-390-7708 or shoot me an email alec@alecwilliamsconstruction.ca. In the meantime, have a look at some of our work over on the website.