By Debra Gelbart
With mortgage interest rates higher than they’ve been in at least 25 years, many house hunters might be thinking twice, even when they find their dream home.However, if you’re looking at making a step up—including such improvements as more square footage or upgraded features—you can always turn to the next best thing to buying: renovating and remodeling.
On trend
When it comes to trends, the home-improvement industry is filled with them. But, according to Darren Estes, senior loan officer at California Bank & Trust, there are a few tried-and-true remodeling projects that every homeowner should consider:
- Bathroom and kitchen renovations[bullet] Adding more square footage
- Energy-focused improvements, especially installing solar panels
- Enhancing outdoor spaces and bringing the outdoors in
- Adding an accessory dwelling unit (ADU), an additional, quasi-separate or separate living space on your property
- Addressing natural disasters and climate change through renovation
“Bathroom and kitchen makeovers definitely give you the biggest bang for your buck,” says Estes, who, in addition to being a mortgage lender, is also a construction and renovation specialist. “With a house that only has one bath—considered obsolete in 2023—adding a bathroom would bring at least 100% ROI when in a desirable neighborhood.”
Additional square footage, such as enlarging a family room, can also provide high return on investment, typically in the 90% range, Estes adds.
As of January 2023, solar panels are required to be included with all new-home construction in the state of California, Estes point out. “But if the square footage you’re adding to your existing home with a remodel is substantial (what constitutes “substantial” varies by county, but roughly, about 2,000 square feet), the permitting authority could require you to add solar panels to that new part of the house.”
Other energy improvements could include new windows with low-emissivity (also known as low-E), which minimizes infrared and ultraviolet light that comes through your windows.
Other popular projects
There are a number of other home improvement projects that are becoming popular with homeowners, especially those that involve bringing the outdoors in. Adding large-scale windows and replacing single doors to the outside with double doors can accomplish this, as well as adding a floor-to-ceiling rolling wall of glass or multi-slide doors with panels that stack side-by side near the edge of the door frame or disappear into a wall pocket.
Enhancing your outdoor space might also mean incorporating a rooftop patio, outdoor kitchen area, pergola or fireplace.
A fairly new trend to the renovation space is adding an accessory dwelling unit (ADU). The term may be new to you, but the concept isn’t. An ADU can be in the form of a detached casita or guest house (also known as “granny quarters”) or a suite inside the main house that has its own entrance. Estes says these are becoming increasingly popular to help family members who want to be near family, but still maintain their privacy. An ADU also can be used as a rental space or property.
Addressing natural disasters and climate change through renovation is another popular trend. This could involve raising a property located in a flood zone, adding hurricane windows in coastal communities, or updating landscaping with fire-resistant options such as concrete pavers, flagstone paths, decorative gravel (also called granite) and natural stones.
The Federal Emergency Management Agency (FEMA) indicates that a house can be elevated to a required or desired Flood Protection Elevation (FPE). When a house is properly elevated, the living area will be above all but the most severe floods, such as a 500-year flood.
What could your remodel cost?
Because of the diversity of California cities and counties, the likely cost of remodeling projects that add square footage is best expressed as a range, Estes says.
“There’s one range for San Diego, Orange County, Los Angeles County, and most of the Bay Area counties like Santa Clara, Alameda, and San Mateo, Typically, that range will be between $350 and $400 per square foot added—bringing a 1,000-square-foot addition to as much as $400,000, or even more if a feature such as an elevator is added,” he explains. “Those are the highest-expense areas.”
In San Francisco, one of Estes’ clients is doing a major addition to a 1,200-square-foot house. However, concrete isn’t available in the city, so it’s being trucked in from 40 miles away at a cost of $240,000. The 1,800-square-foot addition will total about $2 million when it’s completed.
According to Estes, in Beverly Hills, and possibly other especially upscale communities, the average cost of additional or renovated square footage can be more than $500 per square foot. In contrast, in Sacramento, the construction cost range is typically $275 to $325 per square foot. And in communities such as Modesto, Fresno, Bakersfield and Chico, the construction range is $225 to $275 per square foot.“
A small portion of the total cost comes from permitting fees, which for add-on construction can range from $5,000 for an addition that’s 500 square feet or less up to $20,000 for a larger addition, depending on the city,” he says.
Most large square-foot additions can be completed in about nine months. Simpler projects like a bathroom remodel can be completed in about three weeks.