Home Additions: Cost & Value at Resale

home additions start with a foundation, then framing the wallsHome additions vary in cost across the country so it’s a bit scary to give you “average costs” because costs in any area can be higher or lower than the national average. In fact the yearly home Remodeling Cost vs Value Report (www.costvsvalue.com), breaks the data down for  9 regions (and 81 cities) across the USA to reflect regional differences for home additions and other remodeling projects. These differences are based on weather patterns, building codes that reflect weather variations, and the cost of labor and materials which fluctuate based in part on the cost of living for each region.

Regions for Home Additions & Their Variations in Cost/Value

  • East coast regions – includes New England and the Middle Atlantic (New York, New Jersey and Pennsylvania) states.
  • South regions – includes the South Atlantic (Delaware south to Florida), East South Central and West South Central (Texas, Oklahoma, Louisiana and Arkansas). 
  • Midwest – covers East North Central (Illinois and Wisconsin to Pennsylvania) and West North Central.
  • The West – is broken down into the Mountain and Pacific states(Washington, Oregon and California). 

Researching the Cost of Home Additions

Home additions are expensive but they also add value to your home. When planning a home addition or any of the remodeling projects included in the Cost vs Value report, you should review the data to make sure you don’t over invest in a project.

For example, if you live in an area where the average home sells for $300,000, you probably want to plan one of the mid-range home additions versus the upscale home additions. This will help you get the best return on your investment (report or table below) when it’s time to sell your home, because your home’s market (and appraised) value is based on comparable home sales.

Home Additions: The Cost Factors You Can Control

Home additions are made up of many different costs, most of which you can control as you define the size of your addition and the finishes that will be used. To help you get started, here are some guidelines to getting the most value for your investment:

  • Home additions that build up are cheaper because you avoid excavation and foundation costs. That’s why you might want to compare finishing a basement or expanding an attic to create enough living space versus a two-story addition. 
  • Home additions that don’t include plumbing have lower costs per square foot, because you don’t have to run pipes or connect them to the existing system. Many additions involve a bathroom and to save costs, you should place a new bathroom next to (or above/below) existing plumbing, i.e. this is why you often find bathrooms stacked, one over the other … or the kitchen or laundry room.
  • Home additions focus on adding living space but you don’t want to go overboard. If a child’s bedroom will work at 10 x 14 feet, then don’t make it 12 x 16 ft which is 37% larger. It’s true that as the size of the addition increases, the cost per square foot decreases but you may also have to increase your heating and/or air conditioning capacity for this added space.

blueprints-3d-model-a4whoaHome Additions Need Good Planning

When you take time to plan your home addition, you have time to make trade-offs and save money as it’s always cheaper to make changes on paper. Decide how much you can afford (and set aside 10 to 20% for contingency, i.e. problems you can’t forsee) and adjust the size and scope of any home addition to fit your budget.

My experience running a handyman business was people get excited as the project moves forward and make impulsive decisions that drive many projects over budget. Alternatively we uncovered problems like a leaky bathroom window (ignored for how many years), which required the bathtub wall be replaced and yikes, my customer got upset when we went over budget for a lingering problem.

Document Your Plans for Home Additions

Make sure everything gets documented in writing to avoid miscommunication with your builder or remodeler. You can work with an architect or a home designer. Many builders/remodelers are pretty good at drawing up plans too … what’s called design-build. With bigger projects, you should get estimates from at least 3 contractors, and the estimates should include a list of major cost items so you can be sure the estimates are comparable in what they’ll deliver.

Cost, Value, and ROI Data for Home Additions

Here’s the latest cost, value, and ROI data from the 2013 Remodeling Cost Versus Value Report. The good news is:

  • Costs for home additions and other remodeling projects has stabilized over the last 3 years.
  • Home prices and the value of home improvements like these home additions, are increasing again. 
  2009 – 2010
2011 – 2012 2013
Mid-Range Home Additions (Job Cost & Projected Costs Returned When Homes Sell)
Mid-Range Bathroom Addition $39,046 (60%) $40,096 (51%) $37,501 (55%)
Family Room Addition $82,756 (65%) $83,118 (60%) $79,006 (63%)
Garage Addition $58,432 (62%) $57,824 (57%) $48,806 (64%)
Mid-Range Master Suite Addition $103,696 (65%) $106,196 (59%) $101,873 (63%)
Sunroom Addition $73,167 (51%) $74,310 (46%) $72,179 (47%)
Two-Story Addition $156,309 (69%) $165,796 (62%) %152,470 (64%)
Upscale Home Additions (Job Cost & Project Costs Returned When Homes Sell)
Upscale Bathroom Addition $75,812 (58%) $76,209 (53%) $70,969 (56%)
Upscale Master Suite Addition $225,995 (56%) $227,178 (51%) $220,086 (52%)


Have you completed any home additions (my 4-story addition)?

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