How Much Does Adding a Bedroom Increase Home Value?

Adding a bedroom to your home will add utility for your own family, but is it a worthwhile project from a home value perspective? On average, adding a bedroom will increase home value by 10% to 15% and provide an ROI of between 60% and 70%, but whether or not it’s worth it isn’t always cut and dry. Let's discuss how much adding a bedroom increases home value so you can decide if it’s a good option for increasing square footage.

Factors That Influence Bedroom Addition Value

Adding a bedroom will almost always improve home value, but there are a few key factors to consider to get an accurate estimate of the actual ROI.

Number of Existing Bedrooms

The number of bedrooms in a home is one of the first things most buyers look at when shopping for a new house. Having just one or two bedrooms is considered a functional obsolescence, as the house won’t appeal to buyers with large or growing families, so most buyers will look for homes with three or more bedrooms. As such, you’ll see a much larger buyer pool if your home has three or more bedrooms.

Going from one or two bedrooms to three will leave you with an ROI between 80% and 100%. If your home already has three or more bedrooms, your ROI will fall between 60% and 70%.

Type of Bedroom Addition

Another crucial cost and value factor to consider is the type of bedroom addition you choose. Converting existing living space to a bedroom will be the most affordable option and will leave you with the highest ROI, normally between 80% and 100%. Finishing a basement and adding a basement bedroom has an average ROI of 70%. Building a home addition to house your new bedroom adds similar value but costs much more, so your ROI will sit between 40% and 60%. Choosing a detached ADU vs. a home addition will drive up costs even further and may reduce ROI.

Bedroom Size

The size of the bedroom can also play an important role in your ROI, especially if you’re considering the cost to install a home addition to house the new bedroom. You’ll see the highest ROI for mid-size bedrooms that aren’t too small or unnecessarily large for buyers looking at your home.

Quality of Materials

The quality of the materials you choose for your bedroom addition plays a major role in your ROI, too. High-end flooring options, light fixtures, crown molding, and insight from a professional home decorator will bump up your installation cost and maximize your ROI. Choosing more budget-friendly materials makes a bigger difference for home additions, but again, your ROI will be proportionately lower.

DIY vs. Hiring a Pro

Converting an existing space to a bedroom is a job you can tackle yourself if you have some DIY experience, and you’ll pay an average of just $1,000 for the materials. Building an add-on or installing an in-law suite, however, demands help from multiple professionals. In either case, hiring a pro is more likely to lead to a nicer-looking finished product and should deliver a higher ROI.

How to Estimate the Added Value of a Bedroom Addition

Estimating how much value you’ll see from a bedroom addition can be tricky and involves many moving parts. There are a few things you can do to ensure a more accurate assessment.

• Start with an estimate from a professional. First, get an estimate to install your new bedroom from a home addition company near you. This will eliminate some of the guesswork and let you compare your estimated value-add to the actual cost of installing a new bedroom.

• Compare your home to similar properties. Look at properties in your area that are in similar condition and have the same number of bedrooms, and then compare them to local properties that have an additional bedroom. You can get a sense of how much value you’ll see from your addition using these numbers.

• Ask a local real estate agent. When in doubt, ask a local real estate agent for help in determining if adding a bedroom to your home is worth it from a value perspective.

Cost to Install an Additional Bedroom

Converting existing space to a bedroom in a finished area of your home costs between $1,000 and $4,000, depending on the size and layout. Building a home addition for a bedroom costs an average of $50,000, and most homeowners pay between $20,000 and $80,000, depending on the size, land conditions, and the quality of the materials used.

Is a Bedroom Addition Worth It?

A bedroom addition not only adds square footage to your home but also adds utility for your family and potential buyers if you plan on selling your home in the near future. Adding a bedroom is almost always worth it if your existing home has just two bedrooms. It’s also worthwhile in an existing home with three or more bedrooms if you need the space for yourself or if many of the comparable properties in your area have an additional bedroom.