Fri12262014

Business & Real Estate

Does a home addition pay off in today's market?

With the scarcity of homes for resale and the new-building market practically nonexistent in Los Altos and Los Altos Hills, home improvements and room additions are popular.

Remodeling Magazine's annual "Cost vs. Value" issue offers encouragement for homeowners considering such improvements. The magazine's research editors found that, in many cases, additions recoup 100 percent or more of the cost within one year when a house is sold.

"Before starting a major renovation of your home, find out what it's going to cost," Bill Sorenson of Cupertino Home Repair said. "Then find out if you'll be over-improving your home in the neighborhood because buyers will pay more for homes that are in move-in condition, but won't pay more than fair market value."

Consider how long you plan to stay in the house. Over-improving a little is probably OK if remodeling allows you to stay where you are indefinitely, and your home goes up in value.

The most common addition on the peninsula is one bedroom and bath or two bedrooms and bath, followed closely by a family room/kitchen project," Sorenson said.

The average size addition will be 400-1,000 square feet, costing an average of $80 -$100 per square foot. If it's something special it will be more than $120 per square foot. Second story conversions typically cost $100 -$130 per square foot or more.

Remodeling Magazine's editor said the cost of adding a bathroom in San Francisco would be about $15,676, with a resale value of $19,667.

Before you undertake a large renovation project, make sure you have the home thoroughly inspected.

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