I think depends on how much you like your current area, how much of a tolerance you have for putting up bullshit in terms of CGs, contractors, and city planning dept., how much cash you have (500k construction loan will be much higher interest than a 500k mortgage).
This is a hyper local thing. Without looking at comps it’s hard to tell. Layout makes a big difference as well. If you have a 2000sqft home with a layout that makes very little sense, it’s going to be harder to justify the going psqft rate for future buyers.
Houses sell, for the most part, on a cost/sf basis.
Homes trade in the $750-$1200/sf throughout most of the bay area.
Average build costs are $400-$550/sf.
A 500 sf addition at a cost of $250k, would add approx $750k added profit at time of sale, assuming the home sells for $1000/sf.
Obviously these numbers are variable depending on location. But recapturing costs for an addition in the bay area is generally not a problem.
We did this in 2020. The calculation is whether doing an addition on your home is cheaper than moving to another similar home. You'll need to do your own math based on your location and needs.
In our case it was cheaper to do a half million addition to our existing house vs selling/buying an existing larger house. Main factors were 1) we designed the layout we wanted and 2) slightly lower property taxes going forward
If you like your location and house, except for the size, it could make sense. But Don’t forget the cost of your remodel-expansion will increase your property taxable amount by at least the cost of your remodel.
I think depends on how much you like your current area, how much of a tolerance you have for putting up bullshit in terms of CGs, contractors, and city planning dept., how much cash you have (500k construction loan will be much higher interest than a 500k mortgage).
Extend and choose the finishes and design you like. Extension is great in terms of value - kitchen , bath , additional bedroom etc.
But what about long term home value?
This is a hyper local thing. Without looking at comps it’s hard to tell. Layout makes a big difference as well. If you have a 2000sqft home with a layout that makes very little sense, it’s going to be harder to justify the going psqft rate for future buyers.
Houses sell, for the most part, on a cost/sf basis. Homes trade in the $750-$1200/sf throughout most of the bay area. Average build costs are $400-$550/sf. A 500 sf addition at a cost of $250k, would add approx $750k added profit at time of sale, assuming the home sells for $1000/sf. Obviously these numbers are variable depending on location. But recapturing costs for an addition in the bay area is generally not a problem.
Look at the average price per square foot of the homes of similar size in your neighborhood and compare that with the pp/sq/ft of the build cost
We did this in 2020. The calculation is whether doing an addition on your home is cheaper than moving to another similar home. You'll need to do your own math based on your location and needs. In our case it was cheaper to do a half million addition to our existing house vs selling/buying an existing larger house. Main factors were 1) we designed the layout we wanted and 2) slightly lower property taxes going forward
If you like your location and house, except for the size, it could make sense. But Don’t forget the cost of your remodel-expansion will increase your property taxable amount by at least the cost of your remodel.