Home Addition or Move? A Data Driven Analysis

In today's dynamic real estate market, homeowners often face a crucial decision: should they sell their current home or invest in a home addition? This choice can significantly impact your financial future and quality of life. Let's explore the data-driven factors to consider when making this important decision.

Current Market Trends

As of September 2024, the median home sale price in the U.S. was $404,500, marking a historical high2. This represents a substantial increase from previous years, indicating a strong seller's market. However, it's essential to consider local market conditions, as they can vary significantly.

The Case for Selling Your Home

Pros:

  1. Potential for Profit: With home prices at record highs, selling now could result in a significant return on your initial investment.
  2. Avoid Construction Hassles: Selling eliminates the need for lengthy and potentially disruptive construction projects.

Cons:

  1. Limited Inventory: The current housing market faces a shortage, with only a 4.3-month supply as of September 20242. This could make finding a new home challenging.
  2. High Mortgage Rates: As of October 2024, the average 30-year mortgage rate was 6.88%2, which could increase the cost of purchasing a new home.
framing a home addition

The Case for a Home Addition

Pros:

  1. Increased Home Value: A well-executed home addition can significantly boost your property's value. On average, home additions cost between $80 and $200 per square foot4.
  2. Customization: A home addition allows you to tailor your living space to your specific needs.

Cons:

  1. Upfront Costs: Home additions can be expensive, with costs ranging from $21,000 to $100,000 on average4.
  2. Temporary Disruption: Construction projects can be disruptive to daily life.

Return on Investment (ROI) for Home Additions

The ROI for home additions varies depending on the type of addition:

  • Bedroom Addition: A 10x12-foot bedroom costs $9,600 to $24,000 and can provide a solid ROI4.
  • Bathroom Addition: Ranging from $20,000 to $90,000, bathroom additions often offer a good return4.
  • Kitchen Addition: A 200-square-foot kitchen addition costs $48,000 to $95,000 and typically provides excellent ROI4.

Local Market Considerations

In Jenkintown, PA - hometown of Neven & Son Contractors - the median home sold price was $485,000 in September 2024, up 8.5% from the previous year. This local data suggests a strong seller's market, which could influence your decision. Remember that selling high also means you might end up buying high so consider whether this move is a financial downsize or upgrade before abandoning your current home and hiring a home addition contractor.

Making Your Decision

Consider these factors when deciding:

  1. Long-term Plans: If you plan to stay in your home for many years, a home addition might be more beneficial. Selling your home in this market might make more sense if you are in the process of downsizing.
  2. Financial Situation: Compare the costs of selling and buying a new home versus investing in a home addition.
  3. Local Market Trends: Research your specific area's real estate market to understand potential selling prices and inventory levels. Low inventory is currently a factor in much of southeastern Pennsylvania at the moment.
  4. Quality of Life: Consider how a home addition could improve your daily living while remaining in a town you may have come to love and have made a home in versus the benefits of a new home.
  5. Inconvenience: Does the idea of preparing your home for sale (often including renovations), finding a new home, uprooting, and packing seem daunting? Or do you prefer a couple months of active construction on your property?

Conclusion

Whether you choose to sell or build a home addition, working with experienced professionals is crucial. 

As a reputable home addition contractor and relocation specialist, Neven & Son can guide you through:

Remember, the right choice depends on your unique circumstances, local market conditions, and long-term goals. By carefully considering the data and your personal needs, you can make an informed decision that will benefit your financial future and quality of life.


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Citations

  1.  Bankrate. (2024, October 30). Housing Market 2024 Predictions. https://www.bankrate.com/real-estate/housing-market-2024/
  2.  National Association of Realtors. (2024, September 23). Existing-Home Sales Slide in August 2024. https://www.nar.realtor/blogs/economists-outlook/latest-existing-home-sales-data-graphs
  3.  HomeAdvisor. (2024, September 5). How Much Does a Home Addition Cost in 2024? https://www.homeadvisor.com/cost/additions-and-remodels/build-an-addition/
  4.  Home Architect Studio. (2024, October 1). What is the Return on Investment for Home Additions in New Jersey? https://homearchitect.studio/blog/what-is-the-return-on-investment-for-home-additions-in-new-jersey/
  5.  Rocket Homes. (2024, October 3). Jenkintown, Pennsylvania Housing Market Report October 2024. https://www.rockethomes.com/real-estate-trends/pa/jenkintown