Home Additions that Make Financial Sense

Before and after adding a composite deck. All rights reserved: Sitka Projects LLC

The house that looked perfect when you moved in may seem too small just a few years later. Families grow and expectations shift. If you find yourself snapping at family members because you have no extra space in your home, it’s time to consider an addition. There are many reasons why people choose home remodeling additions over upgrading to a new home. Many choose to build additions because they have many fond memories of their current home. Others lack the funds for a down payment on a new house. Whatever your reason, it’s important to ensure that your home addition makes financial sense.  Although additions have a reputation for poor returns as compared to other remodeling projects, you can see a substantial return on investment for your addition project. This article will provide a general overview of which room additions are financially wise.

To be clear, the plain truth is that most home additions will not recoup the full construction investment if you sell within a year. As far as home improvement costs go, additions are not as effective as smaller remodeling projects. Therefore, your motivation for a home addition should not be purely financial. Add a room because doing so will improve your experience and increase the overall appeal of your home.

This leads to a rule for all home room additions: Each one is unique. If your 4-bedroom home has a tiny bathroom, adding a full bath is a good idea. If your kitchen is over-crowded, adding a breakfast nook is smart. Basically, home additions that solve an ongoing livability problem are financially smart. Think back to when you bought the home. What were the drawbacks as far as room layout and size were concerned? Now that you’ve lived in the home for a while, where are the areas where crowding tends to occur? Those areas are ripe for a home addition, especially if adding a room would make your home more appealing overall. It’s also important to consider how your home stacks up against similar homes in the neighborhood.

Even though each situation is unique, according to nearby real estate prices, the specific layout of the home, and the shortfalls that home buyers might shy away from, there are a few overarching statistics about returns on home additions. Because we’re a contractor in Beaverton OR, we’ve chosen to highlight facts about Portland Oregon home additions. In general, homes on the West Coast earn a higher resale value, so home additions see higher ROIs here as compared to the Midwest or the East Coast.

Remodeling Magazine publishes an annual report on the cost vs. the value of various home remodeling projects. These numbers assume an addition of a specific size, with midrange materials. In order of the highest return, here are the average return on investments for various additions, as researched by Remodeling Magazine:

Wood Deck addition—84% return on investment
Composite Deck addition—82% return on investment
Second-Story Addition—73% return on investment
Family Room Addition—69% return on investment
Garage Addition—69% return on investment
Master Suite Addition—68% return on investment
Bathroom Addition—68% return on investment
Sunroom Addition—49% return on investment

As you can see, here in the Pacific Nortwest, a wood deck addition is the smartest home remodeling addition, especially if other houses in the neighborhood have a deck and yours doesn’t. This is the project that will provide the highest ROI, but that’s no reason not to complete a garage addition, if that’s what your home really needs. Your ultimate enjoyment of the new home room addition is the most important consideration.

Many websites state that additions cannot provide worthwhile ROI, but according to Renovation Magazine, that is a myth. Actually, ROI on additions is often low due to poor construction. If you’re emotionally connected to your home, or if you’re searching for a way to add value and livability, a dependable, expert contractor can build an addition that will bring a return of .75-.80 on the dollar. Use Angie’s List and other customer testimonials to discover trustworthy local contractors.