Adding on or Moving out: Which Strategy Is Right When you Need More Space?
by Lorraine Watkins

When you just can't take your cramped quarters anymore, how do you decide whether to build a home addition or move to a new house? Here are some considerations:

1. Location, Location, Location
   Property values tend to be more stable in down markets and higher in up markets in more desirable ZIP Codes. So, it is unwise to move to a lesser neighborhood just for a bigger house. On the other hand, moving from a smaller house in a less desirable area to a larger one in a better neighborhood will increase your immediate costs, and it may take a long time for you to realize a net gain in appreciation. In either case, a home addition is well worth investigating.
   
   
2. Available Space
   When considering a major home addition, or even a single room addition, you must have legal, available space. Take advantage of the expertise of architects for your room expansion design. They may see space where none appears to you.
   
   
3. Cost per Square Foot
   The average construction costs per square foot by ZIP Code are available from realtors and city building departments. When you get bids for a home addition, you can compare the bidders' quotes against each other and against the average construction cost per square foot for your area. When considering adding on versus moving, remember to calculate not only average construction cost, but land value per square foot.
   
   
4. Financing
   Loan rates for remodeling are generally more favorable than for purchasing a home. Sometimes the remodel rate can be had as long as a single wall is left standing. Check with your bank or mortgage company.
   
   
5. Insurance
   Check with your insurance company to compare the rates for a home addition versus a new purchase; they can be substantially different.
   
   
6. Convenience Factors
   Beyond financial and practical considerations, factors influencing your decision of whether to expand your current home include major and minor inconveniences. For example, when you contract for a home addition, there will be strangers on your property, and you may have limited access to parts of your house. Unlike moving, you will not have to pack and unpack, find a new school, baby sitter, church, super market, alternate routes to work, and so on. Some of these convenience factors are not trivial.