To 'fixer-upper' or not? That's the question for many Americans in a pricey housing market

Eight months ago, Matt Klinger and his wife, Nicole, had some tough decisions to make.

Should the Southern California couple with three children under 5 who are outgrowing their condo buy a new house in one of the costliest housing markets in the country?

Or, should they invest in a home in need of some tender loving care, otherwise known as a "fixer-upper," a house available at a lower price because it usually requires expensive repairs and sweat equity?  

After much thought and discussion, they opted for a 100-year-old, 2,500-square-foot fixer-upper with a few structural beam and termite problems. The house got a kitchen upgrade and needed a new roof.

"You begin asking yourself, 'How much work are you willing to put into it?'" Klinger said.

Often an opportunity for entry-level buyers to get into homeownership, fixer-upper houses are increasingly popular by homebuyers of all income levels as higher home prices and interest rates limit purchase power. 

The median cost of a fixer-upper home in the U.S. is around $225,000; that's about 45% cheaper than turnkey homes in cities that are the same size, according to Porch, a home improvement site connecting homeowners and contractors. By comparison, the median price of an existing home is about $403,800, according to the National Association of Realtors.

"The market is both competitive and challenging right now," said Mike Hardy, managing partner for Churchill Mortgage in Los Angeles. He owns several fixer-uppers under repair in Southern California and advised Klinger on investing in an older house.

"You have to look at your budget closely and decide what's in your best interest – to buy now or later, new or old?" Hardy said. "It's a process not to be taken lightly."

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Are fixer-upper houses cheaper?

Klinger paid $1 million for his Craftsman-style home, considered a bargain in California, the most expensive home market in the nation.

His fixer-upper purchase is on par with other California cities including San Jose ($1.3 million), San Francisco ($1 million) and Los Angeles ($900,000), according to  StorageCafe, a storage marketplace.

The expanded kitchen with plenty of natural wood cabinetry and open dining area of the Klinger's two-story home allows their children, Cooper, Chloe and Clara, to run around freely. The space becomes not only a place to cook with room for a large dining room table, but it also has a couple of nooks with small bar chairs to complement that wide play space for the kids.

So far, the Klingers invested about $200,000, a chunk of which went to expand the kitchen. Matt even helped tear down the wall with a sledgehammer that opens up the kitchen to the dining room. Nicole did her fair share as well by helping put together a bench and laying down some of the new floorings.

The upgrades also included converting the fireplace mantle in the living room and a small office upstairs for Klinger. He said they want to do more updates, including repainting the house's exterior and maybe building a small pool in their side yard.

"We're putting (those) on hold for a year or two," said Klinger, adding he'd like to upgrade the bathrooms.

Klinger, who owns a physical therapy and fitness business in Glendora, California, with his wife, laughs when he says, "there's still a lot more that we want to do." 

For now, they are adjusting to being in their relatively new surroundings.

"We don’t know if we made a good decision or not yet, it's going to play out over time because we have a home that still needs a lot of love – a lot," Klinger said.

"Ask me again about this in another two to three years," he said.

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'Do what I had to do'

When Stephanie Zolomij bought her fixer-upper two-story townhouse in suburban Philadelphia in July 2021, she couldn't move in until four months later.

Why? On the day the single mom of 5-year-old twin boys was supposed to close on her home, the "dark and dingy" basement got flooded. She said the water heater "rotted out."

Undeterred, she agreed to replace the heater and rip up the basement's damp old Berber carpet and got a credit back on her purchase.

Then there was the roof so decayed that her homeowner's insurance wouldn't even help cover it.

"So, I got a new roof," said Zolomij, who works in forensic psychology to help get mentally ill violent offenders competent to stand trial. "This house met my expectations, but I knew I would have to pay a little something to get it into shape."

So far, she has spent about $50,000 to get the 1,600-square-foot townhome to where she wants it and pay for unexpected repairs.

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Zolomij and a few friends gutted the kitchen and removed outdated oak cabinets, a pink countertop and the tile backsplash with flowers, fruit and tropical fish that was “exceptionally hideous.”

In their place, she installed "soft closing white 42-inch cabinets and white with gold and gray speckled quartz countertops that perfectly reflect the beautiful, small, reflective mother of pearl tile backsplash," Zolomij said.

But because of supply chain interruptions, there was still a two-month backlog to do that, even after Zolomij paid extra to rush orders.

"That was a drag," she said.

Then the pipes broke on a new kitchen sink a contractor installed and began "leaking everywhere."

And, when a replacement valve for the main water line broke, Zolomij's basement flooded – again.

"Twice in two months," she said, with a wry laugh. "Unbelievable!"

Undaunted, Zolomij replaced all the lights and ceiling tiles, and got "beautiful fluffy, clean carpet throughout."

Zolomij then refurbished the bathrooms, complete with new toilets and fixtures.

"I'm compulsive and a very hands-on person," she said. "I replaced every light switch, face place, you name it. I had to do what I had to do."

That "can-do persona" epitomizes Zolomij, said Kristina O'Donnell, a Philadelphia-area real estate agent who helped Zolomij find and even helped redo her fixer-upper after nearly three years of searching for a more spacious and affordable home.

"She didn't give up. She knew what she wanted and is willing to do whatever it takes," O'Donnell said.

Zolomij still wants to touch up the kitchen and redo her outdoor deck as well as one of the bathrooms in case her mother wants to move in someday.

Also, Zolomij said, her townhouse's heating, ventilation and air conditioning system "haunts me" because it's 30 years old. It works fine – for now.

"But when it goes, that's going to be another big chunk of money," she said.

Zolomij said she and her sons, Abel and Spencer, who just started kindergarten, are in her fixer-upper for the long haul.

"I don't ever want to pick up and move."

How to tell if a fixer-upper is worth it

Perhaps the most important feature for homebuyers to look in a fixer-upper is the potential to create something unique, Hardy said.

"For a fixer live-in, is the rehab going to be structural or cosmetic? A lot of times folks can get a really good price on something that can bring them some equity with some light or medium rehab or more," Hardy said. "More importantly, at the end of the day, is this a home I can be proud of?"

Klinger said, if possible, to find a good contractor willing to do the work relatively quickly. He notes that while his work took only a few months, it's taken a nearby neighbor who has a fixer-upper nearly two years to get most of their repairs done.

"The faster, the better," Klinger said.

On the other hand, Zolomij said fixer-upper buyers should expect that repairs will take much longer than expected to complete and will they likely be more expensive than anticipated.

"You will find things didn’t expect you will need to do as you go," Zolomij said. "And once you start seeing the progress, you will want to do more than originally planned."

She warns that solid contractors, though a must, may be hard to find.

"Make sure you have some sort of signed contract with them to guarantee the job is finished and done right," she said.

Also, Zolomij said to take deep breaths along the way. 

"Give yourself time, patience, and grace," she said. "Remember that the efforts will pay off in the long run and make it the home you want to live and grow in, not what you think others might like."

Follow Terry Collins on Twitter @terryscollins

This article originally appeared on USA TODAY: Why 'fixer-upper' houses appeal to Americans in pricey housing market