Adding on

[waywardal]

Does it make sense to buy a smaller house and add on for my needs, as opposed to just buying a larger house house up front? What does it cost to do an addition? (cost per square foot). Are there property tax addvantages to doing it this way? Does anyone have experience or epxpertise along these lines?

Thanks so much for any comments.

Waywardal

[davelj]

The construction/remodel gurus can correct me if I’m wrong but to some extent it depends on where you are in the pricing cycle. When home prices are expensive, it almost always makes more sense to add on because you already own the land, so you don’t have to pay for it twice. You’re just paying for the materials and labor for the addition. So you enjoy what’s called “forced value” in your home. That is, your addition might cost you $150/square foot but the “value” might be $350/square foot after it’s completed.

But when home prices are really cheap it might make more sense to buy a whole new house.

My guess is that, more often than not, adding an addition is cheaper and more financially beneficial than buying a whole new house (assuming your contractor isn’t a clown that’s trying to rip you off). But, again, I think it depends on where the market is for resale homes versus the cost of doing the addition.

I recently did an addition to my place for about $125/square foot. Even though my place is overvalued right now, I doubt it will fall to below $125/square foot. If it does, I’ll probably be in a below-ground bunker hording food.

[nostradamus]

Did you have the bunker added? 🙂

[NotCranky]

We had a thread like this a month or two ago. Bugs(appraiser), myself (contractor RE licensee) and some others posted. I have been trying unsuccessfully to find that before responding. I know I didn’t say anything too bright in it but maybe someone else did. Perhaps someone can remember and link it here?

Smart post by davelj btw. I don’t think his ideas were expressed in the last thread.

[patientlywaiting]

I recently did an addition to my place for about $125/square foot. Even though my place is overvalued right now, I doubt it will fall to below $125/square foot.

I doubt that your place is overpriced if the acquisition cost was $125/sf or below. 

 

[davelj]

pw, the acquisition cost for my place wasn’t below $125/sf (I wish). I was just making the point that the addition itself makes sense so long as the value of the home as a whole doesn’t fall below $125/sf. Pardon the confusion.

[davelj]

pw, the acquisition cost for my place wasn’t below $125/sf (I wish). I was just making the point that the addition itself makes sense so long as the value of the home as a whole doesn’t fall below $125/sf. Pardon the confusion.

[patientlywaiting]

I recently did an addition to my place for about $125/square foot. Even though my place is overvalued right now, I doubt it will fall to below $125/square foot.

I doubt that your place is overpriced if the acquisition cost was $125/sf or below. 

 

[NotCranky]

We had a thread like this a month or two ago. Bugs(appraiser), myself (contractor RE licensee) and some others posted. I have been trying unsuccessfully to find that before responding. I know I didn’t say anything too bright in it but maybe someone else did. Perhaps someone can remember and link it here?

Smart post by davelj btw. I don’t think his ideas were expressed in the last thread.

[nostradamus]

Did you have the bunker added? 🙂

[davelj]

The construction/remodel gurus can correct me if I’m wrong but to some extent it depends on where you are in the pricing cycle. When home prices are expensive, it almost always makes more sense to add on because you already own the land, so you don’t have to pay for it twice. You’re just paying for the materials and labor for the addition. So you enjoy what’s called “forced value” in your home. That is, your addition might cost you $150/square foot but the “value” might be $350/square foot after it’s completed.

But when home prices are really cheap it might make more sense to buy a whole new house.

My guess is that, more often than not, adding an addition is cheaper and more financially beneficial than buying a whole new house (assuming your contractor isn’t a clown that’s trying to rip you off). But, again, I think it depends on where the market is for resale homes versus the cost of doing the addition.

I recently did an addition to my place for about $125/square foot. Even though my place is overvalued right now, I doubt it will fall to below $125/square foot. If it does, I’ll probably be in a below-ground bunker hording food.

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