Do Additions Add Value to a Home?

If your home is short on space, building an addition can be a great alternative to upsizing to a new home. But will an addition pay off when it comes time to sell? According to Remodeling’s 2024 Cost vs. Value Report, home additions offer a 24% to 35% ROI, depending on the size and type of addition. Learn which factors influence an addition’s effect on your home’s value so you can make the right choice.

Factors That Influence Addition Value

There’s no end to the variety of additions you can build onto your home, whether you’re looking for another bedroom, extra common space to use as a playroom or bonus room, or an additional bathroom so you can avoid waiting for the shower every morning. Every addition will affect your home’s value differently, and there are several factors that can have a big impact.

Size

The square footage of your addition will play a large part in determining its value. Larger additions will have the biggest impact due to the amount of usable living space they add. Size isn’t the only factor, though—even a small bathroom can pay off by attracting buyers when it comes time to sell.

Function

The type of addition can also help dictate its value. Adding a bedroom can increase home value and make your home more appealing to prospective buyers, while a bonus room or common area may not be as big of a draw. Bedrooms and bathrooms have the highest returns on investment when it comes to additions—the added space can make your home more attractive to bigger households.

Construction and Materials

How your addition is built will affect its value—sturdy construction that meets all local codes and visually blends with your home’s design will give you much higher returns than an addition that looks like an afterthought. You may think that using premium materials for an upscale addition will pay off, but higher-end additions don’t actually have as high an ROI as more midrange ones do. You’re better off not using top-of-the-line materials if you’re looking to recoup more of your initial investment.

DIY vs. Hiring a Pro

Building an addition is a job best left to the pros. Hire an architect to design the addition and a local home addition contractor to build it, so you know your new space is structurally sound and meets all required regulations. Because building an addition is structural work, you’ll need to pull permits and have the finished work inspected, and many municipalities require the work to be done by licensed professionals. Look for a pro who builds home additions in the style you’ve chosen so it can be seamlessly integrated with your existing home.

How to Estimate the Added Value of an Addition

Home addition values vary widely, but it’s a good idea to have an estimate of how much value a potential addition will add to your home. A few ways to estimate the value of an addition include:

• Look at similar properties. If you want to take your home from two bedrooms to three, take a look at average resale values for both in your area. 

• Find out what buyers are looking for. See if properties with a certain kind of addition are in high demand in your market.

• Compare total building costs with potential return. Add up materials, labor, permit costs, site prep, and other costs to build an addition to see if the potential increase in value makes an addition a good investment. 

Cost to Build an Addition

On average, home additions cost between $22,000 and $83,000, depending on the size, function, and details of the addition. Costs that can affect your total project price include excavation, foundation work, utilities, architect costs, structural engineer costs, and more. 

Is an Addition Worth It?

If you’re trying to decide between looking for a bigger house or adding on to your current house, or maybe if you’re considering an accessory dwelling unit (ADU) vs. an addition, it’s worth looking at the pros and cons of an addition before making your choice.