The annual Hanley Wood Cost vs. Value report is probably the most trusted source of information regarding the return on investment for various remodeling projects. The company finds the average costs of each upgrade, then surveys real estate agents around the country and estimates the return on investment for each project.
The 2008 report suggests additions are relatively expensive and bring a poor return on investment. An average sunroom addition costs $72,000, and only 57 percent ($41,000) of the total will be recouped when you sell the house. A family room addition is slightly more valuable. The project costs $10,000 more than a sunroom but brings in $14,000 more than a sunroom upon resale. A garage addition is likely to cost less, but brings essentially the same percentage return as a family room addition.
To be sure, the return on investment for most remodeling projects has been dropping along with housing prices. However, even in better times, sunroom or family room additions were low on the value list. A different kind of addition brings the best bang for your remodeling buck. A new wood deck costs about $10,000, and can boost sale value by nearly $9,000.
The report provides national and regional averages, but the true value of an addition is more specific to a city or neighborhood. The real estate mantra of location, location, location also applies to the return on investment for additions and other remodeling projects.
In an older neighborhood, garages may be more rare and more valued. A Denver real estate agent said garage additions are highly valued in downtown Denver, where the 100-year-old homes were mostly built without garages. Likewise, many areas with great views of mountain oceans or sunsets have some oddly designed homes with more walls than windows facing the view. A sunroom can significantly boost sale value if the sunshine also opens up a great view. On the other hand, a sunroom can heat up quickly. Buyers in a warm area might shy away from a home with a sunroom that will be uncomfortable and unused.
Of course, a home is more than an investment. It also is a very personal place full of family and love. A small addition can bring you years of happiness and joy before you start considering resale value and return on investment. Every handyman or car buff needs a place to work, so a few years of loving craftsmanship and fun tinkering may be well worth the added cost of a garage or workshop addition.
A small addition can also create and maintain family harmony. A new family room or small bedroom can give a child her own bedroom, preventing fights and frustration. For small children, a sunroom can become a play area, which will help get toys off the living room floor.