Home & Housing

Should I extend my house or buy a new home?

Calculate whether adding an extension to your current home or buying a bigger house makes more financial sense.

By ShouldICalc Team

Updated January 2025 · See our methodology

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Annual Savings

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5-Year Savings

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Break Even

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Trade-offs to Consider

Every decision has pros and cons. Here's what to weigh:

Money

Extensions cost $100-300/sq ft; moving costs 8-12% of home price plus price difference. Extensions often cheaper but add less value than cost. Moving gets exactly what you want but has transaction costs.
Time

Renovations take 3-12 months of disruption. Moving takes 2-3 months but is a clean break. Living through construction is stressful.
Quality

Extensions customize your current home but are constrained by existing structure. New home gets purpose-built space. Extensions may not perfectly solve your space needs.
Convenience

Staying means keeping your location, neighbors, schools. Moving means starting fresh—opportunity or upheaval depending on perspective.

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Frequently Asked Questions

How much does a home extension typically cost?

Home extensions cost $100-350 per square foot depending on complexity. A 500 sq ft addition: $50,000-175,000. A second-story addition: $100-300/sq ft. Kitchen extension: $75,000-150,000+. Bathroom addition: $25,000-75,000. Costs vary significantly by region, materials, and contractor.

Do home extensions add value equal to their cost?

Rarely. Most extensions return 50-80% of cost in home value. A $100,000 extension might add $50,000-80,000 to home value. The ROI depends on your market, the type of addition, and quality of work. You're paying for utility and enjoyment, not just resale value.

What are the true costs of moving to a new home?

Moving costs include: real estate commission (5-6% of sale price), closing costs on new home (2-4%), moving expenses ($2,000-10,000), immediate repairs/updates ($5,000-20,000), new furniture/window treatments ($3,000-15,000), and lost time. Total: typically 8-15% of home value in transaction costs alone.

How long does a home extension take?

Timeline varies: Permits and planning: 1-3 months. Simple single-story addition: 3-4 months. Kitchen extension: 3-6 months. Second-story addition: 6-12 months. During construction, expect noise, dust, workers in your home, and possibly relocating temporarily.

Should You Extend Your Home or Buy a Bigger One?

Running out of space is a common problem. The question is whether to expand where you are or find a new place that fits. Both options have significant costs—here’s how to calculate which makes sense.

The True Cost Comparison

Extending your current home:

Cost Component	Typical Range	Your Estimate
Construction cost	$50,000-200,000
Architectural plans	$3,000-15,000
Permits	$500-5,000
Temporary housing (if needed)	$3,000-10,000
Landscaping repair	$2,000-10,000
Furniture for new space	$2,000-10,000
Contingency (15%)	Add 15%
Total extension cost	$60,000-250,000+

Buying a new home:

Cost Component	Typical Range	Your Estimate
Sale price difference (bigger home)	$50,000-300,000+
Selling costs (6% commission)	$20,000-60,000
Buyer closing costs (3%)	$10,000-30,000
Moving costs	$2,000-10,000
Immediate updates/repairs	$5,000-25,000
New furniture/window treatments	$3,000-15,000
Lost time/productivity	$2,000-5,000
Total moving cost	$92,000-445,000+

Break-Even Analysis

When does extending cost less than moving?

Scenario A: Need 500 extra sq ft

Extension cost: $75,000-150,000
Price difference for bigger home: $100,000
Transaction costs to move (8%): $40,000-60,000
Total cost to move: $140,000-160,000
Winner: Extension (saves $0-85,000)

Scenario B: Need 1,000+ extra sq ft

Extension cost: $150,000-300,000
Price difference for bigger home: $150,000
Transaction costs: $50,000-80,000
Total cost to move: $200,000-230,000
Winner: Possibly moving (if extension is at high end)

The Value Recovery Problem

Extensions rarely return 100% of cost:

Extension Type	Cost	Value Added	ROI
Bathroom addition	$50,000	$30,000-40,000	60-80%
Bedroom addition	$80,000	$50,000-65,000	62-81%
Kitchen expansion	$100,000	$60,000-80,000	60-80%
Second story	$200,000	$100,000-160,000	50-80%
Basement finish	$50,000	$35,000-45,000	70-90%

What this means:

$100,000 extension might only add $70,000 to home value
You’re paying $30,000 for the privilege of the space
Compare to: buying a bigger home where the extra space is already priced in

The Equity Equation

How much equity do you have to work with?

Example:

Current home value: $400,000
Mortgage balance: $250,000
Equity: $150,000

Extension financing options:

Home equity loan: Borrow against equity
HELOC: Flexible borrowing line
Cash-out refinance: New mortgage, take cash
Construction loan: Specialized for additions

Moving financing:

Equity becomes down payment on new home
May need bridge loan if buying before selling
New mortgage at current rates (may be higher than existing)

The Opportunity Cost of Capital

What if you invested the extension money instead?

$100,000 extension cost invested at 7% average return:

Years	Investment Value	Extension Value*
5	$140,000	~$70,000 added equity
10	$197,000	~$70,000 added equity
20	$387,000	~$70,000 added equity

*Extension doesn’t appreciate separately from the home

The sobering math: Extensions are consumption (enjoying the space), not investment (building wealth).

Location Factors

Reasons to stay (extend):

Factor	Value	Weight for You
School district	Can be huge ($$$)	High/Medium/Low
Commute distance	Time + money
Neighborhood relationships	Quality of life
Kids’ friends/stability	Hard to quantify
Property taxes (grandfathered)	Can be significant
Mortgage rate (locked in low)	Could be $$$$

Example: School district value Moving from excellent to average school district could reduce home value 10-20%. That “savings” is illusory.

Lifestyle Disruption Comparison

Living through a renovation:

Duration: 3-12 months
Noise, dust, strangers in home
Possible temporary relocation
Decision fatigue (constant choices)
Stress level: High

Moving:

Duration: 2-3 months intense, then settling
Packing, cleaning, logistics
Address changes, new routines
Kids changing schools (potentially)
Stress level: High, but contained

Neither is easy. Pick your poison.

When to Extend

Extending makes sense when:

☑️ You love your location (schools, neighbors, commute)
☑️ The space need is modest (one room, not doubling size)
☑️ Your lot and zoning allow the addition
☑️ Your home’s structure supports expansion
☑️ Cost is significantly less than moving
☑️ You have a low locked-in mortgage rate
☑️ You plan to stay 7+ more years

When to Move

Moving makes sense when:

☑️ You need significantly more space (30%+ larger)
☑️ Extension cost approaches or exceeds moving cost
☑️ Your home has structural limitations
☑️ You’re not attached to the neighborhood
☑️ You’d be upgrading neighborhood too
☑️ Current home is at top of neighborhood value (limited appreciation)
☑️ You’re open to change and new experiences

The Hidden Costs of Extensions

What people underestimate:

Permit delays - Can add months to timeline
Contractor issues - Delays, cost overruns, quality problems
Scope creep - “While we’re at it…” adds 15-30% to budget
Living through it - Stress, inconvenience, dust
Landscaping repair - Construction destroys yards
Energy efficiency - Old + new doesn’t always integrate well
Design compromises - Working within existing structure has limits

Budget padding: Add 20-30% contingency to any extension estimate.

The Hidden Costs of Moving

What people underestimate:

Transaction costs - Commissions, closing costs add up fast
Immediate repairs - Every home needs work you discover after moving in
Furniture gaps - New rooms often need new furniture
Productivity loss - Weeks of disruption to life and work
Opportunity cost - Time spent house hunting, showing your home
Emotional cost - Leaving a home with memories

Making the Decision

The financial calculation:

Extension Total Cost = Construction + Permits + Temporary Housing + Contingency (20%)

Moving Total Cost = (New Price - Current Equity) + Selling Costs (6%) +
                    Buying Costs (3%) + Moving + Immediate Repairs

If Extension < Moving by significant margin: Extend
If Moving < Extension: Move
If similar: Choose based on lifestyle factors

The intangible calculation:

Question	Favor Extend	Favor Move
Love your location?	☑️
Kids established in schools?	☑️
Like your commute?	☑️
Want exactly what you want?		☑️
Okay with 6-12 months of disruption?	☑️
Ready for a fresh start?		☑️
Current home at top of market?		☑️

The Bottom Line

There’s no universally right answer. The decision depends on:

Relative costs - Which is significantly cheaper?
Space needed - Modest vs. major increase?
Location attachment - Schools, neighborhood, commute?
Mortgage rate - Locked in low rate worth keeping?
Lifestyle preference - Renovation tolerance vs. moving tolerance?
Future plans - How long will you stay?

Rule of thumb:

Need <30% more space? Consider extending.
Need >30% more space? Consider moving.
Costs similar? Choose based on lifestyle factors.

Both options cost significant money. The question is which delivers more value for YOUR specific situation.

About This Calculator

Construction costs from HomeAdvisor and Remodeling Magazine. Real estate transaction costs based on national averages. Extension ROI data from National Association of Realtors Cost vs Value report. Individual costs vary significantly by region and market conditions. Last updated January 2025.