Should You Build That House Addition?

Building House Addition
Building House Addition. Getty / Branko Miokovic

When interest rates drop and home equity loans become affordable, an orchestra of hammers and saws arises across the nation. This is the sound of homeowners frantically building additions.

The house addition is the single most expensive home remodeling purchase a homeowner will ever make. Unless your tastes run towards solid-gold jacuzzis, this is the only time you will have the pleasure of writing out a six-figure check for one project.  And unlike a botched interior paint job or misguided garden pond, it is not one you can undo.  

Here are the things you need to consider before you call up a local contractor for a consultation.  

Financial: Great High Cost-Value Ratio and Cheaper Than a New Home

Studies show that nearly all of the cost of a mid-range two-story addition may be recovered at the time of sale. The key here is "may be recovered," as there is no predicting the real estate market years in advance (see "You May Still Lose Money" below).

While this might seem like a "no-brainer," it needs to be mentioned. It is typically cheaper to build an addition than to buy a new home that equals the space of your existing house plus addition. At the very least, the closing costs involved with selling your old house and buying the new house would push this option over the top.

But Peripheral Costs Increase and You May Still Lose Money When You Sell

More space means higher heating and cooling costs, more windows to wash and gutters to clean, increased property taxes, and more house to clean.

Even though additions offer the potential for higher cost-value ratios than other renovation projects, you still may not recover the full cost of the addition when you actually sell. 

Space: The Best Way To Add Space

When you look at the various ways to add space to your house, no other method matches the house addition.

  • Sun Room: Sun rooms are poor investments as subsequent buyers may view them more as liabilities to be torn down than quality spaces. If you decide to invest six figures into a fully conditioned sun room, you might as well just build what you really want--an addition.  
  • Finished Basements: Finished basements are viable spaces, but unless you have a daylight basement (one side is ground-level or nearly so), they are gloomy places with few or no windows.  Plus, you are not adding any square footage to your home.
  • Room Additions: Room addition can best be described as mini house additions. As the name says, they are an addition but only one room (true house additions comprise many rooms).  While room additions are your best cost-saving alternative to house additions, they still come at a considerable financial cost and disruption of your privacy.

But They Eat Up Your Yard

Unless you are adding a second story, you will lose yard space and this is space that can never be recovered. 

If you still have young children and you like for them to play outside, you may want to hold off on the addition until they have matured. 

In the U.S., the trend toward smaller and smaller yards continues as mammoth-sized homes envelop lots.  

Emotional: It Is 100% Your Creation

You may have an old house, but the addition is space that you can claim as your own. It is like designing a whole new house without the expense of a whole new house.

Few remodeling projects are as thrilling and creatively satisfying as working with the blank slate that addition-building affords you. Fire up your design software and go for it!

But It May Drive You Crazy In the Process

It is a thrill at first, workers energetically digging and sawing to give you more house. Then one Saturday you wake at 6am to the roar of a gas generator five feet from your bedroom window and realize that your romance with building an addition has hit the rocks.

Worse than that, your relationship with your spouse or partner may hit the rocks.  

Many causes contribute to this, some of which are: having work crews in your house six days a week; noise and dust; constantly dealing with the contractor rather than each other; lack of privacy; and that ultimate relationship-stressor, money worries.