When considering making an improvement to their home, homeowners often look at it from both the enjoyment value it will give them and their family as well as the investment value of what they are doing. Â Granted, there are few, if any improvements, you can make to a home that will give you a 100% return on investment, meaning that, for every dollar you spend, your homes value will go up by a dollar, but there are certainly some improvements that come closer than others.
A common improvement, often considered by homeowners, particularly those in areas with a younger housing stock is a finished basement. Â A finished basement when done right, adds additional living space and/or recreational space to a home that sometimes may have deficiencies in those areas. Â But how much value does that finished basement add to your home? Â Of course, there are many variables that go into the answer to that question including the quality of the space finished, the type of space, location of the home as well as the size of the home, but we can use market data to get a general idea. Â I chose to go with St Charles County for this since the housing stock there is fairly young so the basements are, for the most part, modern, poured concrete basements, usually dry and often with adequate headroom to finish. Â In addition, many are walkout basements which is a plus for finishing. Â To try to keep this as an “apples to apples” comparison I chose only 3 and 4 bedroom homes that sold in the past 12 months.
Homes with finished basements sold for nearly 8 percent more…
As the tables below show, in my comparison, homes that had finished basements sold for a median price of $125 per foot and those with unfinished basements for $116 a foot, a difference of 7.8%. Â The homes with finished basements also sold faster too, selling in a median time of 14 days, less than two-thirds the time it took to sell a home with an unfinished basement which was 22 days (granted, both sold fast!). Â So, if we do the math and assume that the houses with finished basements, which had a median of 1,719 square feet without the basement (which happen to be smaller homes than those without), sold for the same price per foot as their counterparts with unfinished basements, then that would make the median sales price $199,404, or $11,596 lower, than it was.
As I mentioned above, there is a lot more that needs to be considered, but, as the data shows, there is definitely a return, both in price as well as time to sell, for having a finished basement, but certainly not enough to do it for just investment return reasons. Â However, if you are going to get enough benefit from the space for an adequate amount of time, it may end up making a lot of sense in the end.
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