Should You Build an Addition On Your Home?
As of now (2025), interest rates remain higher than they were a few years ago, housing inventory is limited, and we are still experiencing a seller's market, with many homes selling in just a few days.
Reasons a Home Addition Could be Right For You
You Already Love Your Current Home
Many older homes on the Main Line possess a unique charm that is hard to find elsewhere. You've already invested time and effort into making your home exactly how you want it, not to mention the family memories created there. If the thought of leaving all that behind makes you hesitant, adding a home extension might be the perfect solution.
Moving Would Mean Making Major Sacrifices
Even if you find a new home that meets all your requirements, it might be just one town over in a different school district, which could force your kids to rebuild their social circles. Additionally, you may have strong ties to your current community and be actively involved. New locations might not be as walkable or convenient as your current one. While a new home may fulfill your physical needs, it may not align with your lifestyle preferences.
Financial Analysis of Building an Addition
Recently, a valued client from Wynnewood, PA, contacted me to weigh the pros and cons of building an addition to his home. As a financial due diligence analyst for a wealth management company managing $500 billion in assets, he focuses heavily on the numbers. With one child at home, another on the way, and a third planned, his three-bedroom house is quickly becoming insufficient.
Current Home Details:
Property size: 2,700 square feet
Purchase price in 2020: $575,000
Current estimated value: $980,000
Addition Proposal:
The rough estimate for adding 2 bedrooms, one full bath, one half bath, an office, and a recreation room—totaling an additional 1,000 square feet—is approximately $500,000.
Market Comparison:
Once completed a comparable property in the same neighborhood is valued at over $2,000,000.
In this case, by choosing to build an addition instead of purchasing a new home, the client stands to save about half a million dollars!
Reasons Against Building an Addition
Lack of Space
While many homes on the Main Line have large plots of land available for building, this is not true for all properties. Depending on the size of the plot and the home's orientation in relation to the property lines, there may not be enough space for a functional or valuable addition. Simply adding square footage does not guarantee that it will be usable.
Financially, I can understand the argument that a $300,000 addition might be justified even if it only adds $150,000 to the home's value, if you plan to live there for decades and will use the new space regularly. However, if the addition ends up being functionally useless— a glorified storage closet with a seldom-used powder room—it ultimately becomes a complete waste.
You Can't Afford It
Everyone's financial situation is different. Before starting a large project with a significant cost, make sure the numbers work in your favor rather than against you. It may be more economical to purchase a different home rather than taking out a second mortgage, charging expenses to credit cards, or securing a loan. Conduct thorough financial analysis and assess all options based on your circumstances. Sometimes, the best decision is to do nothing at all.
In Conclusion
A home addition can be a great way to increase both the value and enjoyment of your home. However, it could also be a poor choice that leads to immediate regret. This is not a project to take lightly; it's crucial to conduct your research and ensure everything is in order before moving forward.