From my perspective, there are three issues here: needs vs. wants for the remodel, finances, and impact on resale.

In terms of the value of a remodel over the next 13 years, what do you really need to work better, and what are things that you want or would be nice to have? It sounds to me like you don't really need the third bedroom in and of itself.... but will being able to change the footprint for the kitchen and dining room be able to improve their functioning? How important is that to you? That's a lifestyle question, and no one else can answer that for you.

In terms of resale, I think it's important to be sure that you are not remodeling in a way that is much too overdone compared with other houses in your neighborhood. Even though you plan to stay in the house for more than a decade, things do happen sometimes that we don't expect. If you had to move, you know you would not totally recover the cost of the remodel, but it's worth checking with a few realtors who know the neighborhood to make sure that you're not adding 25% to your home's value, if you are already less than 10% below the most expensive home in the neighborhood. I have talked with the realtor who helped us buy our current home two years ago. If it's been much longer since you bought, you could still go to an open house or two in the neighborhood and see if the realtor who is hosting has a few minutes to chat.

The basic financial question, about whether to put money towards a remodel vs. college savings or retirement, is one you have to discuss with your financial advisor. It depends where you are in terms of the current level of savings for those other needs.

Good luck with making your decisions!

It certainly sounds as if you have a good house for adding a 3rd bedroom. Your house is in a community that has larger homes and could support the cost of the addition if you are in there at least 10 years. Three bedroom homes are usually easier to sell than two bedroom homes unless the cost is so different. What would this do to the yard?

You are getting along well with the house as is though, so what would be your goal with the addition or major remodel?

If it's just to add value for a future sale, I would hesitate to recommend spending a lot as you have no way of knowing what the market will be in 13 years.

If your neighborhood has two bedroom houses that sell as well as 3 BRs, you don't really need the 3rd to be competitive in your market.

If you are happy with the current layout of the house, you may not need to reconfigure the floorplan by moving rooms. Is there a reason you want to do this? I did a remodel however, where we put the kitchen in the old living room and vice versa and it only added about $2000 compared to leaving things where they were, and the old kitchen could stay in use for part of the construction. Maybe if you clarify why you are thinking of changing the floorplan you will get a more specific response.

In general, my advice would be to remodel responsibly, without overextending yourselves financially, and in ways that make you more comfortable in the house--not something based upon resale, which you are not planning on for some time.

regret the money they have sunk into their house 10-15 years ago. They can only get it back if they sell,

Interesting perspective. I'm really not sure how much you get back if you sell 10-15 years AFTER remodeling. Unless it's a major add-on redesign of some kind. Even then....

There are lots of reasons to remodel. Money back on resale should be the reason ONLY if you plan to turn around and resell immediately after remodeling. If that's not the case, then you should remodel to please yourself and consider the money as spent (gone). Then if you do get some back at resale in the years forward, great, bonus! But don't plan for that.

You probably need to think about the benefits of adding the third BR: What will you use it for? Will it improve the living conditions an amount comparable to the $$ spent? Will you regret not doing it when you had the chance? Is spending the money on that a hardship?

I would not base my decision on the experience of somebody at work who may or may not have been happy with the results vs money spent on a remodel years ago. What matters is how much you want/need these ammenities, and how easily you can afford them.

One other consideration: how many bathrooms do you have in your home? If you have two bedrooms and only a single bathroom, and the other homes in the neighborhood have three bedrooms and two bathrooms, you may not be adding as much value for resale as you might hope.

Otherwise I would agree with others that you need to discuss with your family and/or financial planner about what your long-term goals are. And then prioritize. Also, consider discussing with a real estate expert in the area (no idea how you actually find one who is willing to discuss this) what makes sense from an investment perspective. Keep in mind that a "good investment" remodel may still only net you a percentage of your spending and you need to determine if that extra cost is providing some value to you.

eastbaymom - you are right, it is a need vs wants questions. The 3rd bedroom would be office/exercise room and occasional guest room. We currently use our living room as a guest room when family visit. I would like a 3rd bedroom, to get the office desk out of our bedroom and the eliptical and weights out of the family room, but really, is it that necessary, as we've had this set-up for 5 years?

Good suggestion about talking to a realtor before we do anything to make sure we are not over improving. We do NEED to change the kitchen, dining, laundry room as they are all too small

Financial advisor - yes, we need to talk to someone. I personally feel that retirement and college savings should be more than we have right now.

steff_1 - we do need to work out what our goals are. We started with fixing the layout problems with the kitchen/laundry room and that led to, well this is too small too, and if we could have extra room here then we could have this, and while we're out we've never liked this...and it seems to be ballooning, maybe more than it really needs to be. It's easy to get carried away I suppose.

palimpsest - there are problems with the kitchen/laundry room/dining room being too tight. But rather than adding on, maybe there is a way to rework what we have. The 3rd bedroom comes in with the thought that it would be adding value to the house and make it easier to sell. We've have 1800 sq feet but only 2 bedrooms, 1.75 baths and a big living room and a big family room - we love both those rooms.

I'm having the current floor plan drawn up, so we can see what we have to work with, what walls are load bearing etc.

I agree with remodelling responsibly, and not overextending our selves financially. We really need to get more information and crunch the numbers to see what will make sense for long term financial goals.

lowspark - DH's work colleagues have been hit by both housing crashes. One lost a lot of money when he had to sell after the crash in the 90's, and now as he's getting closer to retirement and has to get kids through college, he's regretting money spent on the 2nd house feeling that a little less space or amenities would have been fine and not cost as much. DH's work has cut back salaries considerably and they feel house rich, cash poor and with retirement and college on the horizon, feeling like they should have been content with less house. I think they're cautioning DH to not do the same thing, especially as DH's industry isn't expecting to bounce back too quickly. He's salary is now 30% less than it was 18 months ago. We do have to take that decrease into account.

You are right about considering the benefits of a 3rd bedroom to US and how doing the remodel will improve OUR lifestyle.

DH and I have a lot to think about, and a lot of information to get before we can make a decision.

I would be extremely cautious if the industry that your primary bread earner is not certain. 30% drop in salary is not insignificant and maybe that way for a long period of time.

I have seen several people getting caught in this housing "crunch" as you call it. Divorces seem to be the biggest issue since the house HAS to be liquidated to cash out the other person, unless there is another source of money. If you are overimproved, then you can't even get out of the situation without bringing large sumes of money to the table, ie under water.... I have personally seen a few of these in the past few years.

The second common problem seems to be job transfers. There is a house in the neighborhood for sale at 1.5 mil, down from above 2 mil. That is a HUGE drop. They have been in Europe due to the job transfer for over a year and the house is empty. I have seen many of these around.

My brother bought into a bigger house/better neighborhood. As a consequence, my SIL is now working full time. She was working part time before. These are choices and consequences of house decisions that people make.

I have heard from some colleagues that they are not where they want to be financially because of the housing drop, stock market drop etc. These things happen in life. No one can predict.

What you have to plan for is multiple scenarios and be comfortable with many possibilities. Some people are fine with uncertainties of the future and immediate pleasure and others are less comfortable with that. You and your DH has to be able to figure out where your comfort level is. These types of discussions are very difficult because we have to examine our core values and how we live with them. We also have to be honest about our uncertainties and risk taking levels with ourselves and our families.

Only you know how to balance now versus later, which is what balancing house remodel versus retirement/college savings are all about. I wish you the best.

If I were you, I would save for 2 years as if you were doing the large remodel. Then when you have the money in hand, and the economy hopefully has become more stable (or less stable!) and hopefully things (the decisions) are more certain for your family. Then you can decide how to procede. Nothing has to happen now. Your house is not so bad that it is unhabitable, I presume. 2 years is nothing!

kaismom - oops, I did a typo. DH's salary dropped 13%, things seem to be stabilizing and it might stop there. But, who knows. I do agree that we need to think through scenarios and decide what we are comfortable with doing. It's unlikely that we'll have a job transfer. DH's work is only located here, but there's always the possibility that he decides he's done and wants to do something else. We'll need to move in that scenario.

I also know some people whose housing decisions had serious consequences for the family. I think everyone is right that you need to seriously consider all your options and take the time to make a decision that is right for you. It can be very easy to get carried away and spend a lot of money. "While we're at it, let's do x and y as well."

I like your idea of taking the two years to keep saving and more time to decide what we as a family need. And I'm leaning towards less is enough.

Thanks everyone for your advice. I've got a few people to talk to, more information to get, wait until work seems more stable, before we do anything.

I agree 100% with kaismom's last paragraph. Save for two more years as if you were going to do the big reno. In the meantime go to every open house in your neighbourhood, talk to neighbours and real estate agents about prices, and about how easy it is to sell 2 bedroom houses in your neighbourhood. In my area it is extremely difficult to sell a two-bed home, but clearly that isn't the same everywhere. Take the next two years to talk with a financial advisor and plan for retirement and university for your child. Two years isn't a long time to wait for the reno, but it is enough time to gather all the information you need to make an informed decision.

Your specific question was "how did you know how much was worth putting into your home?" I know the real estate market in my neighbourhood very well - I live in a strong area (from a real estate perspective) where housing prices have continued to rise (modestly) over the past couple of years. The recession left our city relatively unscathed. Our jobs are (relatively) stable and our retirement plans are (more or less) in hand, as is our university saving for the kids (although we need to work a little harder on this). In addition, we intend to sell this house in about 15 years when my youngest heads off to university. At that time we plan to move to a less 'ideal' neighbourhood, a smaller house, and use 50% of the value of our current house to augment our retirement savings. So we invested heavily in this renovation, pouring a new foundation, water-proofing the rest, putting in new insulation, new floor and ceilings beams, removed walls, built a fab kitchen, you name it (the house was built in 1877, as my DH says, we fixed 150 years of other people's mistakes). We spent a lot, but thanks to my knowledge of the real estate market and our financial situation I'm fairly confident that we have made good decisions - although I know that if we had to sell our house next year we wouldn't re-coup everything we've put in. There is always risk, but careful research and consideration will go a long way in mitigating that risk.

Good luck.

Go take a look at the headlines about homes and foreclosures at this time and the predictions about the "next shoe to drop" in the housing market. Then talk to a realtor about what kinds of houses always sell in your community and to someone with a big house who is trying to sell it right now. Then remember the classic advice about the advantages of living in a good neighborhood but not in the biggest house in it.

The advice your hubby got at work from people closer to retirement is a good thing to think about. As I look back on my own generation which grew up after WWII I think about so many parents, who proudly raised families in modest new houses now scorned by the current generation of new house buyers.

There's an architect author named Sarah Susanka who has published a series of books based on the "not so big house" concept, beginning with _The Not So Big House_ and most recently one on renovations which I have not read yet. This week she was a speaker on our local public radio station. It's worth a listen. She got her start here in the Twin Cities but has now moved to the East. Her comments about making a house distinctive are worth hearing.

Throughout her writings, the ideas she tries to remind us about are that well-designed spaces are better than monster spaces, that too large a space can actually make life harder, and that life is about other things.

____

On another note, as long as I've mentioned this writer...
The radio interview also has a few assorted tidbits, including the use of light as a design concept that draws people and how "wingwalls" on the side and top of windows bounce light into rooms. (It's a pledge week piece, unfortunately, so there's a lot of air in the piece and not a whole hour of interview.)

Here is a link that might be useful: Sarah Susanka, Architect and Author, radio interview about

What you are describing is a classic case of the "might as wells." Take a long look at what is really important to you.

Work out your reasons for making the changes first. A high COL area will also mean high estimates for the work you want to have done.

Most of the advice here is that you should not renovate your house for a potential buyer ten or more years down the road. That is excellent advice. Do what works for you first. Can you take things in stages? If plans are being drawn up, see if there's a two phase plan that can be implemented over time. Laundry room first, bedroom addition if things improve later.

During the last few years many people got in way over their heads in real estate. The stress of losing hundreds of thousands in value while your income is dropping is hard to handle. You really don't want to be in that situation.

bump

My parents added onto their home several times while they were there. The last time they added a beautiful sunroom. At the time their neighbor, a realtor, advised against it stating that it would over build the neighborhood & they would never be able to get what a house that size would be worth. They did it anyway. That room was all glass on one side looking out onto their beautifully landscaped backyard. Inside she had a fountain, plants etc. The room brought them much joy! It was a very tranquil place.

My point is this - do what makes YOU happy (within your means of course) I'm now trying to sell my parents home as my father has passed & Mother is in a nursing home. The joy they received in their last 10 years sharing that room with family & nature far out weighs the issues I'm having with selling it.

Good luck with your decision!

It's hard to predict the future, but history suggests that as baby boomers retire, they will be seeking smaller houses. It's quite possible that 15 yrs from now, there will be more demand for two bedroom homes than larger, more expensive to maintain on a fixed income, homes. There is also the on-going appeal of being a starter home in a good neighborhood of larger homes. There's no reason to add the extra bedroom now for future resale.

Thanks for everyone's responses.
DH and I have decided to not rush into a decision. We'll take the time to work out what is best for us, both in terms of lifestyle AND finances. I so want to rush ahead, DS is now 5 yo and wants to cook more with me in the kitchen. I have to move him and the step stool, so I can get to things. It is very frustrating, but I'll continue to deal with it until we're ready to go ahead. Meanwhile, I'll keep reading, get more ideas and drool over all the gorgeous kitchens.