Realm’s Guide to Home Additions

It’s not always up to you where and what you can build on the property that you own.

If you need to make more space for your growing family — whether that’s more kids on the way or parents moving in with you — you may find yourself weighing the pros and cons of adding more space to your current home versus upgrading to a larger home.  Here’s what you need to consider:

  1. Compare cost per square foot to build versus buy in your area
  2. Evaluate your timeline
  3. Learn where you can build
  4. Weigh the cost and value implications of each option

We explain each of these factors in detail below.

1. Compare cost per square foot to build versus buy in your area

If you live in a smaller house in a high-value area, it’s likely that it will be cheaper to add on square footage to your existing home rather than purchase a larger one. 

For example, San Mateo County (Bay Area) is one of the most expensive counties to buy a single family home. The cost per square foot to buy is 340% more expensive than the $ / sqft to build. Look up the stats in your county.

2. Evaluate your timeline

Living in your home during ongoing construction isn’t fun. If you’re going the addition route, keep in mind that their timelines can vary. Most additions are impacted by:

  • Time to receive your building permit in your city
  • The size and type of the addition (rooms with plumbing are more time consuming to construct than those without)
  • The design and shape of the roof, since it impacts how easily the new roof can be attached to your existing roof

On the other hand, keep in mind that selling one property and buying another typically takes about six months.

3. Learn where you can build

The most important things for you to know are in the order of least restrictive to most restrictive:

  • Setbacks — The minimum distance which the home must be set back from the lot line. These are often highest for the front of the property, and in most neighborhoods, building an addition on the front of your property is not allowed.
  • Lot coverage — The percentage of the lot that is allowed to be covered by the home. This impacts how much space you can add on the 1st floor, garage, and backyard home.
  • FAR — The ratio of a building’s total square feet to the size of the parcel. This is inclusive of square footage on all stories of the home and thus can impact how much space you can add on the 1st and/or 2nd floors.
  • HOA rules —  If your property is part of a homeowners association, there may be additional restrictions on what you can build. Most often, HOA rules have to do with the exterior style of the home and maintaining curb appeal, but many HOAs require approval on any construction project that you want to undertake.

Each city has different restrictions. In some areas, all four of the following restrictions apply but in other you might only be dealing with setbacks. Here are two similar sized lots with different zoning restrictions which impact each homeowner’s ability to add square feet.

Sherman Oaks
Portland, ORSherman Oaks, CA
Current Sqft 1,1821,914
SetbacksFront – 10f
Side – 5ft
Rear – 5ft
Front – 20ft
Side – 5ft
Rear – 15 ft
Lot CoverageMax 2,480 sqftn/a
Portland – More area available to build out based on setbacks
Sherman Oaks – Limited area to extend the home out based available based on setbacks

4. Weigh the cost and value implications of each option

There are 4 ways to add space: 1st floor addition, 2nd floor addition, garage conversion, and building an ADU. Based on what’s allowed you may be able to pursue any of the 4 options or will be limited to a couple of options. 

Here’s the analysis Realm provided for each of the above properties.

The Portland home has smaller setbacks and is only restricted by lot coverage, whereas the Sherman Oaks home has larger setbacks and is has a more stringent restriction of floor area coverage (FAR) — meaning that adding square feet on the 2nd floor also counts towards the zoning restriction. On the other hand, the Portland home is not allowed any ADU units whereas the Sherman Oak home is allowed both 1 ADU and 1 junior ADU.

Portland, OR home – The lot has space for a 700 sq-ft addition or the option to convert the garage. Both projects are strong ROI, but the home addition has the added benefit of create incremental space and preserving the garage.

ProjectCost of ProjectROI%Home Increase
Home Addition –700 sq-ft$99,500 – $121,610207%$228,999
Garage Conversion – Detached$64,350 – $78,650208%$148,653

Sherman Oaks, CA home – Although the lot is zoned for a backyard home, there is not enough space left given setbacks to add one. This home only has space for a 360 sqft addition due to setbacks & FAR restrictions, or the option to convert the garage as is or with an extension.

ProjectCost of ProjectROI%Home Increase
Home Addition360 sq-ft$140,100 – $171,240210%$327,312
Garage Conversion$63,051 – $77,062292%$204,495
Garage Conversion + 150 Extension$98,998 – $120,998244%$268,580

If you’re considering a home addition, check out the free cost & ROI estimates within your dashboard. If you’re also looking for detailed zoning analysis, recommendations on vendors, and a more precise ROI estimate based on detailed comps analysis, consider our $99 project planner report.

Published by Realm

Get more out of your biggest asset: your home. Realm shows you what your home could be worth & how to access more of its potential value.

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