Is Finishing a Basement a Good Investment?

Average Costs to Finish a Basement

• Many factors influence the cost of finishing a basement. These include the size of the basement, the area of the country in which you live and the scale of the project. For example, if you include a bathroom, you will add thousands of dollars to the cost. If you'll be adding electrical outlets, you will further increase costs. However, a general average ranges from $20 per square foot for basic basement renovations to more than $50 for higher-end remodels. $25 to $35 per square foot is considered a medium price range.

  "Remodeling" magazine compiles a Cost Vs. Value Report, which lists the average costs of remodeling projects and the value they retain at resale. The 2010/2011 report states that the nationwide average cost of a basement remodel is $64,519. However, that figure includes more expensive additions such as a bathroom and a wet bar, both of which add thousands of dollars to a basement renovation's overall cost. According to ServiceMagic, the average cost of a more basic basement remodel is $20,680.

Average Costs Recouped at Resale

• According to the Cost Vs. Value Report, nationwide, 70 percent of basement remodel costs are recouped at resale. This number is down from more than 90 percent in 2005, likely due to increased construction costs and the housing market recession. Basement remodels ranked 9th on the list for recouped costs. Entry door replacements have the highest cost recouped at 102 percent, followed by garage door replacement at 84 percent.

Costs Recouped by Region

• The costs recouped for finishing a basement also vary greatly by region. For example, the Cost Vs. Value Report states that the Pacific region (including California and Washington) averages almost 83 percent of costs recouped, while the Middle Atlantic region (including Pennsylvania and New York) averages only 58 percent of costs recouped. According to Remodeling Magazine, the percentages vary due to construction project costs and home prices in a particular region. Areas with high construction project rates and dropping home prices typically have lower-than-average costs recouped.

Reasons to Finish a Basement

• There are many reasons to finish a basement; it is up to you to decide whether doing so is a good investment for your family. It is typically less expensive to finish a basement than to add an addition to your home. So if you need more space, finishing the basement may be a better investment than adding on to the house or moving. Adding a bathroom and bedroom to the basement can be appealing to potential home buyers and ultimately increase the value of your home.