After owners have lived in a home for several years, they often realize that they’ve filled up the space quite well – perhaps more than they expected when they first bought the home. Like a hermit crab who grows to fit the size of his shell, homeowners often question whether an addition is the solution or whether they should find a different home altogether.
For homeowners who have completely outgrown their home, the only solution is usually to move up to a larger home. This will require selling your current home and buying a new one. If you’re trying to decide whether you should build an addition or move altogether, we’ve included some talking points below that should help you decide which option is better!
Will the home addition actually solve your problem?
Perhaps you have a specific need that can be remedied by an addition:
- A play room to contain toys so that they’re not sprinkled throughout your home
- An expanded master bedroom with full walk in closet(s) or bath
- A detached garage to park cars and store lawn equipment, tools, etc
If you find that you need more space in general, you should probably consider moving up to a larger home. Adding a single room to your home will not alleviate the other problems you’re also experiencing like not enough storage space in the kitchen and having to share a bathroom with the kids and not having enough space to entertain.
Another common complaint we hear from owners is that their current floor plan simply doesn’t meet their needs. If you live in an older home and are debating tearing down walls, know that this can get pricey (up to $15-20K) if the wall is large and load bearing. In cases where you would need to reconfigure your floor plan, the cost is usually not worth the benefit. It would be better in the long run to buy a new home with a better floor plan.
What is the cost of adding on compared to the price/foot that homes sell for?
On James Island (where I live), we’re currently seeing houses sell for an average of about $194 per square foot. The average current listing is $269 per square foot. This discrepancy is caused by a sharp increase in prices over the past few months as well as the difference between list and sales price.
When you get an estimate from your contractor, be sure to determine the cost per foot that you’ll be paying to build an addition. If this amount is drastically higher than what homes are currently selling for in your area, you should strongly consider whether this cost will yield a return if you were to sell the home. And from a Realtor’s perspective, you should always consider resale value – even if you think you’re going to be living in a home long term. I’m amazed at how quickly people’s plans can change due to a career change, pregnancy, divorce, sickness, or taking on care for an aging parent. You don’t want an unexpected change in your financial situation to put you in a situation where you need to sell your home and are unable to do so.
If I were considering an addition on my James Island home, I would feel comfortable paying over $194/foot because I know the historically low inventory of listings combined with extreme buying demand will continue to increase sales prices in the foreseeable future. However, I would certainly not want to pay more than $269/foot because I would worry that I wouldn’t be able to get a return on my investment. Keep in mind that when plumbing is involved (for a kitchen expansion or new bath), the cost goes up quickly.
Will this addition help with resale?
Again, resale and overall value should always be on your mind when making big home renovation projects. You don’t want a sauna or other highly personal style preference to pigeon hole your home and make it a deterrent for future home buyers. The best advice I can give is to make the addition a flexible space – unless it’s a bathroom or kitchen that has a very obvious function. For example, if you wanted to build a home office, I would suggest making it a large enough space that it could also be used in the future as a secondary den, rec room, or play room. Almost every home builder in Charleston right now offers floor plans with flex rooms because they appeal to so many buyers. The goal is to not tailor the space so much that it can’t be reimagined or repurposed in the future.
Have you talked with your Realtor?
You can also talk with your Realtor to make sure that your investment is in line with home buyer activity. He or she might have suggestions that can improve your project from an investment standpoint. After all, we Realtors have seen a lot of great renovations as well as mistakes – and buyers tend to give very candid feedback as they tour homes for sale. Use this feedback and experience to your advantage!
Will you be able to pay for the construction out of pocket, or will you need to get a loan?
If you need to get a construction loan, will the monthly payment combined with your regular mortgage payment be manageable? How does this amount compare to taking on a new loan on a new house? With interest rates at incredible lows right now, you might find that a new loan which is $50K higher than your current one has a more affordable mortgage monthly payment.