When Is a Home Addition the Right Investment?

Home Builder

Everyone dreams of the day they’ll live in their ideal home. Some people plan to move or build from scratch, while others rely on additions to improve their living situation. Adding a second story, sunroom or third bedroom ensures that your house continues to meet your family’s evolving needs. 

Unfortunately, home additions can be quite costly and time-consuming. In some cases, building a new house is easier and more cost-effective than putting an addition on an existing residence. How can you know if a home addition is a good investment for you? Here are five questions you can ask to find out. 

Why Do You Want One?

Before you start drawing up plans and calling contractors, get to the root of why you want an addition. Are you out of space? Is something missing that you don’t want to live without anymore? Here are a few reasons you may want to add on: 

  • You want a place for your kids to sleep when they come home. 
  • Your mother-in-law is moving in with you. 
  • You want to feel more connected to nature. 
  • You’d like family gatherings to be comfortable. 
  • You feel claustrophobic in your home. 

Think about the home addition you want and write down as many answers to this question as you can. Once you know why you want the space, you’ll be able to rationally evaluate whether it’s the best solution for you. 

What Solution Makes Sense? 

Now you can consider what solution makes the most sense. For example, say you want to add two bedrooms because your kids are married and need their own space when they visit. You could add a second story to your house, but it might make more sense financially to relocate instead. 

Consider your reason for wanting a home addition and write down all the possible solutions that come to mind. Some kinds are easier to achieve than others – for example, adding a sunroom is less work than putting a second story on your house. Many homeowners find an addition is the best solution to their problem. 

Is It Legal? 

You need to ensure a home addition is legal before proceeding. Some neighborhoods have height restrictions on buildings. You should also consider zoning regulations and whether you have enough property to support an additional wing or room on your house. 

The best way to answer these questions is by visiting your local planning and building department. It can look up zoning and easement records for you. If you decide to move ahead, you’ll need to purchase a building permit and schedule regular inspections to ensure the new structure is up to code. 

How Much Will It Cost? 

The total cost for your project will depend on several factors, including your location, availability of building materials and how many square feet you’re adding to your home. Here are some other factors that will affect your finances: 

  • Pay for contractors and workers
  • Price for licenses and insurance
  • Cost of architects and building plans
  • Renting expenses to escape the mess

Adding a small bedroom to your existing home costs between $9,600 to $24,000 on average. Bathrooms and living spaces are more expensive. Adding an entire second story can cost $100 to $500 per square foot.  

Will It Add Value?

Ask yourself if putting an addition on your home will add to its overall value. Usually, more square footage means a higher asking price. However, you may also have to pay additional taxes while owning the home. Highly valued spaces like bathrooms, kitchens and second stories may bring you a higher ROI than a simple extra room. 

Most home additions end up costing more than you’ll ever get back. However, there are additional ways to find value. You’ll get your money’s worth if you live in your renovated home for several more years by enjoying the new space. An addition isn’t usually the best idea for homeowners planning to move or sell soon.

When a Home Addition is the Right Move

Use these five questions to assess whether an addition is a good investment for your family. Spend time considering all your options so you can choose the solution that makes the most sense. Many homeowners find adding on is an excellent way to create their ideal home.

Comments (4)

Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em: golfArizona@cox.net

Thank you for sharing the information. Buyers and sellers in your area will benefit from your expertise. Wishing you continued success.  Have a wonderful day and sell a house.  bill

Jun 21, 2022 12:15 PM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good evening James,

This is one of the best posts I've read concerning when a home addition makes sense and is worth the investment. Love the outline certainly worth reading before making a decision.

Jun 21, 2022 07:04 PM
Jan Green - Scottsdale, AZ
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Great post!  You've made some valid points.  This is a great go-to for your clients!  One of my clients is considering adding on to his master bedroom.  It's a great idea and I know comps will support his ideas.  

Jun 23, 2022 06:38 PM
Kristin Johnston - REALTOR®
RE/MAX Platinum - Waukesha, WI
Giving Back With Each Home Sold!

Great information.   Thanks for sharing and make it a wonderful day!

Jun 27, 2022 07:04 AM