Do Home Additions Add Value To A Home?
Homeowners often remodel or add on to their homes for several different reasons. Whether it is to change the look for their personal preference or to try and add some value to the house, home additions can be expensive, so homeowners often wonder if it is worth starting a project.
The right home additions can add quite a bit of value to your home. With the average addition, you can expect to easily add tens of thousands to your home in The Bay Area. Unfortunately, some projects add little or no value to your home. It’s beneficial to know the difference.
The last thing you want to do is spend time and money on a home addition to find out it doesn’t quite add the value you thought it might. If you add the right additions to your home, you could sell and usually turn a profit. We’re going to help you know which is which.
If you are located in the Bay Area you might want to check out our How Much Does a Home Addition Cost in the Bay Area? article.
How Additions Add Value To Your Home
We will talk a lot about the phrase return on investment or RIO. This means the percentage of the cost it took for the additions that you will potentially get back when you sell.
RIO is an important metric to understand. In essence, just because you put in $30,000, you may not get $30,000 back. The return on investment percentage will help you to decide if it is financially smart to pursue your add-on with your budget.
A home can be an excellent business opportunity for some people. If you buy when the market is right and work on home additions, you could sell within a few years to turn a decent profit.
For some of you, you may fall in love with a different home and worry that all the hard work you put into your home will go to waste. Thankfully, that is not typically the case. Let’s look at the cost and added value for various home additions in the Bay Area to give you a good idea of what project you may want to work on in the future.
Bathroom Addition Value
Adding a bathroom is one of the most common additions because a bathroom does not need to take up a lot of space.
Bathroom additions can be simple half baths or even expansions of the existing bathroom. An extremely frustrating thing in any home is not having enough bathrooms. Trying to sell your home with only one bathroom will not help with the value in your home.
A growing family looking to buy may be turned off from purchasing the house because there are “only” so many bathrooms.
It is one of the more budget-friendly additions. It is also easier to live in the home while work takes place. You may not get a 100% return, but it could make or break a sale of a home in the future.
You will typically spend around $15,000 to $65,000 to expand or add a bathroom. A bathroom addition will add value. When selling, you can expect a 50% to 60% return on your bathroom addition investment.
Bedroom Addition Value
Bedrooms are next on the list as being one of the most common home additions. These typically are not just added for the value but instead added for space:
- A growing family
- Guest bedroom
- Even a playroom
As this list demonstrates, there are so many options that a bedroom can become other than just a bedroom.
It also looks quite enticing when selling a home to have 4 to 5 bedrooms instead of 3 to 4 bedrooms. If you add on to your existing footprint, this addition will increase the perimeter and square footage of your home, which will instantly add value.
The cost to add a room can be around $20,000-45,000 for a standard bedroom, to as high as $65,000 for a second master or guest suite. They need little work and are typically a simple space. A bedroom addition will add value. When selling, you can expect to see a 50% return on investment.
Kitchen Addition Value
Adding on to your kitchen can cost quite a bit more than a simple room addition.
Luckily, kitchen additions are one of the more value-producing additions you can do. Every home does not need an extra bath or bedroom, but a decent kitchen is a must. A gourmet kitchen is a gift!
A large kitchen can be a big selling point for:
- Coming together
- Throwing parties
Even some who don’t cook are sold on a home with a large kitchen. It is no wonder why the return on investment is so high.
It will cost anywhere from $50,000 to $150,000, depending on exactly what you are looking for.
Kitchens can have many different details and add-ons that make the price much higher. Your kitchen addition will typically give you around 80% to 90% return on investment, which is among the highest ROI out there.
Closet Addition Value
Some homes do not have closets in every room, which can be very frustrating. Adding a simple closet is a straightforward addition to take on and won’t cost nearly as much as you may think. Storage space is a must-have for every home. It can help reduce clutter and helps with organization.
In the Bay Area, a simple closet should only be $2000 – $12,000, or with a walk-in closet adding all the bells and whistles, it could cost thousands more.
When selling your home, buyers will almost always want closets. And because they will quickly add value to your home with a 100% return of investment when selling, they are a particularly good idea and should be added if you have the chance.
Deck Addition Value
Adding a nice deck to the back or side of your house is a wonderful idea.
It is great for get-togethers, can be filled with comfortable outdoor furniture, or even have a small kitchen/grill area. It enhances the backyard giving it a bit of a facelift.
Expect to pay about $15,000 to $40,000 for a simple deck and much more to furnish it. Add on a grill or small kitchen area, and it could make it around $50,000-$100,000.
Some believe a deck should not add much value to your home, but you can typically see anywhere from a 40% to 80% return when you sell.
If you have a decent kitchen area on your deck, you can expect a 100% to 200% return of investment. Depending on where you live, an outdoor kitchen area is a hot commodity.
Closing In Your Deck– Sunroom Value
While many people enjoy sitting on their deck, feeling the breeze and sun, others do not.
During the colder months, it is nice to feel the sun but not the chilly air. A sunroom not only adds more square feet to your home but gives you a wonderful sanctuary to enjoy all year-round.
When installed and put together well, a sunroom could cost about $50,000 or more.
A sunroom can be a living room, breakfast area; the list is truly endless.
Because sunrooms are nearly all windows, the lighting is exceptional, and depending on where your home is located, the views could also be amazing.
Even though it is a beautiful addition to your home, a sunroom typically will only give you a 52% return on investment.
Adding On A Garage Or Carport
Adding a garage or carport to your home can be incredibly beneficial to you.
A carport is a little simpler but will still protect your car from weather and make the home look a little better. A garage can incorporate a workstation and house cars.
Choosing a detached garage will cost you a little more versus a structure that isn’t free-standing.
With an attached garage, you can take advantage of the same:
- Anything else coming from the primary residence you may need to incorporate into the garage
Plan on spending around $30,000- $50,000 for a traditional garage, and for the detached garage option, you will need to add in all the cost for adding things like plumbing, electric, heating, and cooling.
You can typically get an 80% return on your investment, and a detached garage can also be turned into a small apartment/ living space and rented out.
This means you could get a 100% return on investment in the end.
If you are adding a carport instead of an enclosed structure, it could cost anywhere from $6,000 to $25,000 with a return on investment of about 90%.
Second Story Over Existing Garage
Some homeowners choose to take advantage of the space above their garage.
This space could be turned into:
- A simple guest bedroom
- Work area
- Even a living space (if there is a separate entrance, some homeowners rent out above the garage as a small apartment living space.)
While this is a straightforward second story addition, as far as second-story projects go, plan on spending about $80,000-$140,00 or more.
The return on investment for this type of expansion is about 60%.
Shed Addition Value
Adding a small shed in your yard will allow extra storage without taking up space in your garage.
These structures are perfect for:
- She Sheds
- Man Caves
- Kids’ playrooms
- Kids’ toys
- Really anything you would like to have stored out of your yard.
The average shed will cost about $1,000 to $59,000. You can also buy a premade shed with added features inside.
Those are typically delivered and set on the pre-poured foundation.
Because sheds are such a diverse building, you can get up to an 80% return on investment, which is pretty good for a building that typically only holds clutter.
What Upgrades Add Value To Your Home?
There are many small projects you can do around your home to add a little value.
Each project may not add $10,000, but it will give your home an overall better look and can help with an appraisal.
Here are a few easy upgrades or tips for keeping and adding value:
- Fresh Paint – A simple coat of paint on the walls and the trim
- Clean – This should seem like a bit of common sense but a nice deep clean of the home and keeping things that way help
- Curb Appeal – Upkept grass, garden, shrubs trimmed nicely, trees trimmed, driveway spotless and sidewalk newer, fresh paint, new siding, cleaned brick, gutters cleaned inside and out
- Updates – Light fixtures, brighter light bulbs, new cabinet hardware, new outlet covers, light switch covers
- Furnishing – Upgrading linens, curtains, curtain rods, rugs, pillows; simple things can change the whole look of the home
- Appliances – If you have outdated appliances, this is one that will give a significant change. The look and feel of your home will change instantly
- Solar Panels – This is a great way not only to cut costs (they end up paying for themselves); it also increases the value of your home. The ROI is 100%, not including the amount of money you will be saving. While they may not have the best curb appeal, their purpose outweighs the lack of aesthetics.
Building Out Compared To Building Up
Adding a second story onto your home is surprisingly less expensive than adding onto the perimeter of the house.
The material cost alone is far more cost-effective to add a second story.
Adding a second floor to your current home will not take up your valuable lot space. However, you still get the extra rooms or baths you want.
Also, think of the curb appeal, a lovely tall two-story home with a yard looks really nice.
A house that is one level, extremely wide, and taking up the whole yard can turn people off to the idea of purchasing the home.
You also end up much closer to your neighbor’s house if you build close to your property line.
Adding a second story can cost approximately $60,000 to $100,000, but it could be different based on exactly what you want and your overall square footage.
The typical size of a second-story addition is around 3 feet by 15 feet for a storage area, but can go up to 15 feet by 30 feet for two bedrooms or a recreation room.
You can anticipate an approximate 65% return when selling.
Bump-Outs Addition Value
A bump-out or micro addition is precisely what it sounds like. It is an extra space that will be smaller than a full addition.
It is typically not more than a few feet out but can stretch the length of a part of your home.
Bump-outs are typically intended to only add a little bit more space to a small room.
A smaller bump-out can set you back $17,000 to $30,000. You can expect to see about a 30% to 40% return on investment.
Dormer Addition Value
A dormer is a roof-structure that contains a window that projects out vertically past the plane of a pitched roof.
Most of the time, dormers are only for curb appeal and actually serve little-to-no purpose. At the same time, some choose to take the opportunity to add a little more headspace or daylight in the attic or upper floor.
Whether you are interested in creating a nicer look for your home or if you simply need more space, a dormer could work well for you. They really can add quite a bit of space to your home. They make the perfect reading nooks too.
One drawback of dormers is that they are relatively expensive for the small amount they add to the home and for the little that they do.
They can range anywhere from $10,000 to $30,000. You can expect only to see a 40% return on investment for a dormer addition. Therefore, if your dormers are just for looks, then think twice before building.
To-Do A Home Addition Or Not
If you have the finances, it will always be a good idea to add-on to your home, especially if you plan to sell someday. You should keep in mind that if prospective buyers plan to get a loan on your home, you can only sell it for what it appraises for.
The average bank will not loan a buyer more than what the home is worth. This means a potential buyer won’t get a high enough loan to cover the listing price, if it exceeds the appraisal price.
When your house is appraised, the homes in your neighborhood are also taken into consideration.
If you add far more to your house than any of the homes on your block, you most likely won’t get back everything you put into the home because it just is not what homes sell for in that area (this is how realtors and potential buyers typically view it.) A million-dollar house in a neighborhood where no home is over $400,000 just won’t sell for as much as you would hope it would.
Home additions can add tremendous value to your home, depending on what you choose. Remember that building up is cheaper than building out. Keep your curb appeal nice and if you are not living in your forever home and plan to sell one day, add on.
You may not get all the money back you have put into the home when you sell, but you should at least get a decent profit. Different markets could even give you a hefty profit.