Home owners usually think of expanding their house by adding an addition either in the form of a new room, an extended kitchen or an additional bathroom. The belief that home additions will add value in the property is one of the main reasons that make one take such a project. But does it? This article will discuss the impact that home additions can have on the value of a house, what kind of additions are the most useful, and what you need to take into consideration before planning such a project.
What Is a Home Addition?
A home addition can be any type of change or addition to an existing house.
These additions can include:
Additional Rooms: Adding an additional living area such as a bedroom, office or sunroom.
Enlarged Kitchens or Bathrooms: Upgrade or remodel of existing areas to allow better use.
Second Stories: Putting on more stories to get more square feet.
Basement Finishing: The transformation of basement spaces that are incomplete into functional rooms such as family rooms or guest suites.
These additions might appear to be an excellent method of improving your living space; however, the effect that it will have on the value of your home depends on a number of factors.
How Do Additions Affect Home Value?
Increase in Square Footage
The most straightforward manner in which a home addition can bring value is through square footage increase in the home. Generally, the bigger the space of a house, the greater its possible value. This is particularly so in regions where big houses are sought after like in the suburban or the rural markets.
Bigger houses are usually sold at higher prices due to the fact that it has more living space, which is appealing to prospective buyers. As an example, you can add a bedroom or bathroom which will make your home more desirable, especially to a growing family.
Improved Functionality
The functionality of your living space can also be improved through home additions and this can help increase the value of your property. An addition, well designed, can make your home more comfortable, more efficient, and this value is added in the mind of the potential buyer.
As an example, a remodeled kitchen or a completed basement can significantly enhance the manner in which you utilize your house. A house with modernized, practical spaces will attract more potential buyers since they will not have to invest in additional renovations or updates.
Appeal to a Broader Market
Some home extensions such as an additional bedroom, home office or bathroom may attract a larger number of buyers. Such forms of renovations enable your house to accommodate various family lifestyles, like bigger families or even home workers. An example of this is a home office addition which has gained particular popularity with the emergence of remote work.
Which Home Additions Offer the Best Return on Investment?
Although any addition can be potentially value-adding, not all additions represent an equal value-add in terms of ROI. The added value to your house usually depends on the kind of addition, the real estate situation at that time and the neighborhood.
The following are some of the additions that are likely to provide the most ROI:
Kitchen Remodels and Upgrades
Kitchen is said to be the heart of the home and it is one of the most vital areas to potential buyers. Remodeling of kitchens by adding new appliances, updating cabinets and adding counter space can add great value to your house.
Bathroom Renovations
A bathroom addition or upgrade may also provide a good payoff. A half-bath, a master en-suite or a new or renovated bathroom will make your home more comfortable and functional.
Bathroom additions or remodels can give a ROI of 70-80%, depending upon the quality of the finishes and size of the remodel.
Adding a Bedroom or Bathroom
The addition of a bedroom or a bathroom will make your house much more attractive especially when the number of bedrooms or bathrooms is less than the average of the houses in your neighborhood.
New bedroom or bathroom will provide an ROI of about 50-60 percent and this is a good investment to the homeowner who seeks to add value to his home.
Finishing a Basement
Transforming a basement that is not in use into a living space, i.e. a family room, guest suite or a home theater, can add tremendous value to your house. A complete basement is a great addition with a lot of square footage that can be very useful.
A basement finishing usually has a ROI of approximately 70-75%, because it creates usable space without the expense of increasing the home size.
What Factors Affect the ROI of Home Additions?
Location and Market Conditions
The payoff on your home addition is mostly dependent on where you reside. In a neighborhood where big houses are needed, like suburban areas or regions with high family population, an extra bedroom, a bathroom or a living room can add a lot to the value of your home.
Neighborhood Comparisons
In order to get the highest ROI your home addition must be in style, size and quality of the homes in your neighborhood. Over-improving a property (e.g. putting luxury features in a house in a modest area) might not pay off well. Those who are interested in buying a house tend to rely on similar houses and it is therefore essential that your property should be in line with the overall value of the locality.
Quality of Work and Design
The quality of the addition is another important factor. A well-planned home addition which will fit perfectly in the existing structure will yield a much higher return as compared to a poorly done addition. Moreover, the design must be practical and must attract the taste of potential buyers.
continue reading
