New addition on house construction

With the housing crunch so many are experiencing, you might be wondering if it's a sound investment to add on to your existing home instead of looking for a bigger house.

This can seem like an especially good option if you like your neighborhood and your schools. Who wants to move if they can help it? There are many good questions to ask yourself if you're looking into this process, but here are just a few to get you started.

Is there a financial gain to adding on to my house?

If you're thinking about adding onto your house, it's probably because you would like to stay there, not because you want to sell it. However, it's good to keep in mind whether you'll ever be able to recoup the cost of a major remodel like a home addition if you do eventually sell it.

According to the data available for 2018, the value of the two most popular home additions for this year - a bathroom addition and a master suite addition - are just over 50% of the original cost. That means it's not a total wash when it comes to resale value.

It also means it's not something you should do to your house just to sell it. Doing a master suite addition or a new bathroom addition should be about what you want from your home.

In addition, it may make more sense in the current market if you can finance an addition for less than it would cost to find a new house with the equivalent square footage you would have after adding on to your current home. When you factor in how much it costs to move and the costs involved in closing on your current and new house, an addition may look on paper like it makes more financial sense.

What are the potential financial losses to adding on to my house?

However, there are many other considerations to a new home addition. Your energy costs will go up when you are heating and cooling a new space. Then there are the extra windows, floors, and gutters to clean and higher property taxes.

All this means that you will almost certainly not recover the full cost of your addition when you sell. If that's not why you're contemplating a new addition, it probably won't deter you. However, another thing to consider is the potential disruption of your life.

Will adding on to my house be as disruptive as buying and selling?

There's no getting around the fact that selling your house, buying a new one and moving are all significant disruptions to your life. It can be stressful even to contemplate. You have to clean, stage, pack, and keep everything in order. Then you have to keep the house ready to show at a moment's notice.

However, you may not realize the cleaning and vacating involved in new construction. Depending on how much house you are adding on, you may lose much of the function of your home for quite a bit longer than you may have thought.

Any new construction will involve a lot of dust getting everywhere in your house and workers in and out at all hours of the day. You may even have to leave your house while the work is being done. Compared to the hassle of selling and moving, adding on to your home may be about the same or more.

Could other potential losses be involved in adding on to my house?

A new addition could bring you the much-needed space you're looking for without having to change schools or neighborhoods. That's the good part; the reason you are thinking about taking the plunge.

You can expect to regain most or half of what you spent in resale value without paying as much as you would for a bigger house. That's another piece of good news. Besides losing your privacy and the function of at least portions of your home for an untold amount of time, you may also have to sacrifice valuable yard space.

If your kids are young, you know that's a big deal. It may not be worth it when it's all over. You could also be sacrificing the sanity of your relationship and your family, so you really have to plan ahead and get some real-life stories from other families who made this choice.

Conclusion

Building a home addition may sound like a good option in a tight housing market with few new homes for sale. However, it's best to take into consideration all the costs associated with this decision before you opt for that over selling your home.

If you have any questions about the resale value of home additions in your area, we would be happy to help. 

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