Buying a New Car vs Investing in Your Home

If your car is reaching the end of its life, it’s tempting to buy a brand new one. There aren’t many things in life that feel better than hopping in the driver’s seat of a brand new car, smelling that new car smell, and pulling out of the driveway.

But, new cars don’t come cheap. On average, a brand new car costs roughly $30,000. And the average new car owner pays around $480 per month for five years.

Wouldn’t it make sense to spend that money in a smarter way?

Look, we’re not here to judge anyone. If you want to shell out 500 bucks every month on a new car, go for it. We get it. They look great. They feel nice to drive. And it’s comforting to know that your car is going to start every time you need it to.

But, in our opinion, it makes much more sense to put that money into a home investment.

Here’s why:

New Cars Depreciate Quickly

Have you ever heard someone say, “A new car depreciates as soon as you drive it off the lot”? Well, it’s true. A new car loses around 10% of its original value as soon as you leave the dealership.

In fact, you don’t even have to drive it. All you really have to do is sign the lease. As soon as you’ve dotted your i’s and crossed your t’s, the car is officially considered “pre-owned”. You’ll probably never be able to sell it for the original price and you certainly won’t get more than you paid for it (unless you wait 50 years for it to become an antique…but even then…).

The depreciation doesn’t stop there either. A car loses value for the next five years after you buy it. It drops 20% to 30% within the first year and 15-18% every year after that.

…But Houses Appreciate in Value

Unlike automobiles, homes have the potential to accrue value. If you keep your home up-to-date, it’s likely to become more valuable over time.

In 2017, the value of an average American home increased by roughly 6.5%.

And, the more work you put into your house, the more it will gain value. So, any money that you spend on your home is money that you’ll recoup once you decide to sell.

 On average, homeowners who invest in a finished basement recoup around 77%. Those who invest in a bathroom remodel or a kitchen remodel recoup around 72%. Even something as simple as a window replacement adds value to your home and becomes money that you’ll make back eventually.

So, in the car vs house investment debate, there’s no question—investing in a home remodel is always the better choice.

Don’t Spend Money on a New Car, Invest in Your Home Instead

If you’re seeking a long-term investment, it makes much more sense to remodel your house. A kitchen, bathroom, or basement remodel should cost the same (or even less) than a brand new car. Depending on the size of your house, you can probably remodel multiple rooms with that money.

Of course, we know that you need to be able to drive. You have to get around and go to work. But, you don’t necessarily need a brand new car to do that and / or can your current car last a few more years.

Instead, save your car money, buy used, and put that cash toward a home remodel. You’ll love living in a remodeled home and, if the times comes for you to sell your house, you’ll be happy you made the right choice.

HomeWorx is the best home remodeling contractor in Des Moines, IA. We offer kitchen remodels, bathroom remodels, and a range of other services. Call us for a free quote today!