Should You Build Onto Your Home or Move?

Deciding whether to build onto your home or list it requires careful planning and consideration. Further, you need to determine if an addition fits your budget or whether your town would even permit one. At the same time, the real estate market may not be where you need it to get the most for your home.

Should you build or buy? Here’s a dive into the possibilities to determine what’s best for your situation.

Home Additions Are a Hot Commodity

For several reasons, you might be interested in adding square footage or an accessory dwelling unit (ADU) to your current home. Times have changed since the pre-pandemic years — nowadays, multigenerational living setups are the norm. Approximately 24% of people between 55 and 64 live with their adult children.

According to the 2021 report Family Matters: Multigenerational Living Is on the Rise and Here to Stay, caring for an aging or sick relative and pooling financial resources are homeowners’ top reasons for moving in together. The survey also found the following trends to be vital to successful multigenerational living:

• 46% and 43% of respondents say extra bedrooms and bathrooms are essential, respectively.
• 38% indicate that private areas are necessary.
• 30% of those surveyed suggested the need for a home addition.

Considering that  40% of millennials are more likely to care for older family members during a health crisis compared to Gen Xers and Baby Boomers, a home addition could be most appropriate.

Things to Consider Before Building an Addition

Before hiring a contractor to build upon your home, you must decide on the best possible solution to meet your household’s needs. Are you looking to create a separate ADU, a mother-in-law suite, extra living space on the first floor, or extend the roofline for additional second-floor rooms?

Deciding whether an addition fits your budget is another factor you must work out. The average price range for an addition runs between $20,000 to $72,000 — however, adding a second floor could cost upwards of $200,000.

As such, ask yourself the following questions before digging into your wallets:

• Would this type of addition add value to my home?
• How would I build my home differently if it was new construction?
• In what ways can I save — or can I receive tax credits for eco-friendliness?
• What zoning restrictions does my town or city have in place?
• Will this addition be attached or detached from the main house?
• What other areas do I need to renovate for more functional living, such as the kitchen, door openings, and living room?

Consulting with contractors or people who’ve already built on to their homes can provide greater insight into what you need to do to your own home. Also, considering the age and ability needs of everyone in the house is essential.

Starting Over Someplace Else

Of course, whether you can’t get approval or it doesn’t work budget-wise, building onto your current home may not be an option. In that case, moving may be in the cards.

According to the 2022 Home Buyers and Sellers Generational Trends Report, 27% of homebuyers list life changes — growing their family, marriage, retirement, or another type of family addition — as their top reason for moving. Additionally, 10% want a larger home, while 8% seek better conditions for a household member’s health.

Homeowners weighing moving to avoid the cost of building an addition might be surprised that relocation can come with a steep price. The average cost for a full-service move runs about $9,060 — however, some moves are nearly $30,000. This is in addition to the 60% of Americans who claim the total is often higher than their initial estimate.

The current housing recession and higher mortgage rates may be enough to consider building an addition. Tight inventory and less affordability are waning demand, as the median price for a home was $403,800 in July 2022, increasing 10.8% from the same time last year.

Weighing those costs with the potential for increasing home value may clarify the answer. For instance, 33% of buyers say they would spend almost $3,000 more for a mother-in-law suite — in-law suites and finished basements were the top two amenities they looked for.

Consider Building Now and Moving Later

Until the current housing market turns around, the decision to build onto your existing home may be more financially sound. Weigh the pros and cons — including the expenses — to determine if extending your home is best for your household’s long-term needs.