We had the opportunity to give quotes on several house addition projects this past year and it seemed like people were caught off guard by the cost of these projects. Today I wanted to take you behind the scenes and hopefully provide some clarity as to why additions can be costly little projects. To put things in perspective, I am going to talk about price in terms of cost per square foot.
First, let's talk about new construction in general. In our area, the cost to have a new home built starts at about $180 - $190 dollars per square foot. Typically, this is for a prefabricated home that would include basic floor plans and finishes. To have a contractor build your home onsite from start to finish, I would say you are looking at starting at $180 per square foot. The last several additions we have quoted have cost between $200 - $225/sqft. But why are they so much more?
1. Time is money
Have you ever been involved in a remodeling project where the contractor starts the job and uncovers an unknown issue? That is often the norm of remodeling. There is almost always something wrong or unforeseen that requires the contractor to scratch their head to figure out the best way to proceed.
Maybe there is a cistern smack dab in the middle of where the new toilet was supposed to go. Maybe half the electrical in the house is powered off one circuit that feeds the bathroom. Maybe there are floor joists broken and termite damage. You get the picture. Expect the unexpected. All of these issues can be overcome, they just require time and effort.
Now, imagine you are connecting a brand new house to an old settling house. Plus, you want that addition to look natural and like its always been there. You want the old house to flow seamlessly into the new one. This alone takes much more time and effort than just starting from scratch on a brand new lot, and so it typically costs more.
2. Economy of Scale
Additions can also cost more because of the “economy of scale”. Let me explain.
As I stated above, time is money. Economy of scale is a term to explain why its more expensive (per unit) to hire a carpenter to put up 20 feet of baseboard vs 100 feet of baseboard. The reason is because there is a set amount of time for each job required for setting up the job. This is what costs the money and takes the time. After I have hauled my tools to the job site, set them up, and ran my 20 feet of baseboard, it doesnt take that much more time for me to run another 80 feet.
Another example, I could put in 1 window in two hours or I could put in 3 in 3 hours. The smaller job will cost more per unit. Its the same when you go to walmart and see that the larger bag of chips costs less per ounce than the smaller one. You get savings when you buy in bulk. That is what makes additions cost more. You are paying all the set up fees of the various contractors without much square footage in return.
One last point as it relates to the “scale” of the job. In our area, we lack dedicated subcontractors for many of the trades, one of which is drywall subcontractors. There are drywallers that will travel to Chanute, but the job must be big enough for them to travel here. If it isn't, the work will have to be performed by local carpenters who are more expensive to do the same job. This is just another example of why smaller jobs tend to cost more.
So, am I saying your addition is definitely going to cost $200-$225/sqft? Possibly. However, there is one other very important factor when considering an addition. What are you adding on?
3. Not all square footage costs the same.
Any discussion around the cost per square foot of an addition has to include what you are adding on.
Bathrooms and kitchens are hands down the most expensive rooms in your house. They require higher priced materials such as tile, cabinetry, and countertops. Plus, they have extensive plumbing and electrical needs. This makes them much more expensive per square foot than a standard bedroom. This is what makes pricing projects per square foot complicated. It all depends on what is going in the square footage.
The addition I mentioned before that cost around $225/square foot included the addition of an all new, large primary bathroom and a built in safe room. This project was also drawn by an architect so that it would flow nicely with the existing home and from the outside look as if it had always been there. All of those factors contributed to the $225/square foot. If we were adding two simple bedrooms that would be a different discussion, one that would likely fall below the $180/sqft mark.
I hope this post helps shed some light on why additions cost more per square foot than building a new house. However, if you already own your home and have a low average cost per square foot, you can do an addition and end up having a house that costs less per square foot on average than building a new one.
We'd love to answer more questions around home additions and new construction. If you have questions, please comment below!
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