The shorter answer: it depends.
There is more than the financial side to consider too. Finishing a basement to a high standard isn’t a small investment, so if you’re going to do it, be sure that you’re doing it for the right reasons.
What does finishing a basement cost?
You could spend anywhere from $20,000, if you’re DIY’ing some of it, to over $50,000 for turnkey, depending on the finishes you’re going for and the size of the space. If you want a bathroom and there isn’t one at least roughed in already, you can add another $5-10,000+ to that bill.
If you’re going to finish a basement, do it right
A $30,000 average seems like a lot of money but that’s the price for a job well done. Because of issues like moisture / humidity and colder temperatures, you don’t want to cheap out on this project. A good contractor will strip your basement back to the studs and work from there, adding moisture barrier if it’s needed, insulation, flooring, wall joists, drywall, lighting, electrical outlets and painting the space.
If you’re adding a bedroom to the space, which a lot of people opt to do, you need to factor in the cost of adding a window that can serve as an emergency exit, in the event of a fire. That will add upwards of $2,000 to your total.
A bedroom in the basement?
Particularly in cities like Toronto, where single family homes can be smaller, leveraging the basement as additional space is a valid option. If you have teenagers, they might like having a bedroom and bathroom away from the rest of the gang upstairs, for example. A spare bedroom for guests is also a good option to consider. An in-law suite could be just the ticket if your parents are moving in!
Beyond building a bedroom, you can build in a great family room, TV space or games area for the kids. There are a lot of great ways to use a basement space.
What other types of finishes can you consider?
A basement with a walk out to a garden space is more valuable than a fully enclosed basement, if your lot allows for it.
Depending on the grading, and if a walk out is not an option, you could have full sized windows, which give a much lighter appearance and make the space far more open and usable for a variety of needs.
Some people add bars / wet bars and that’s a fun notion but not everyone’s cup of tea, so consider that if resale is in your immediate to mid-range future.
What’s the return on investment to finishing a basement?
If you’re going to be living in the house for a few more years at least, you will about 70% of your investment back. The space ‘above ground’ is more valuable, but with a greater tendency for families to be living with multiple generations in one home, having that extra space is often something buyers are looking for. They want it to be clean, light, and free of humidity. If you’re ceilings are too low, or your windows too small, the appeal is more limited.
However, if you need more space for your family, renovating a basement is certainly cheaper than adding an addition above ground. If you want to add another floor up, there are significant costs as nothing really exists for that, from flooring to walls, wiring and a ceiling. Further, you usually have to leave your home while an addition is being added, whereas that’s not the case with a basement refinishing project.
The valuation on your home, compared to market value, considers the added space of a finished basement but not at the same value of above ground space. So if you live in a bungalow and decide to finish the basement for added space and value, your house is not suddenly considered ‘2 storey’ and won’t be valuated the same way as an above ground 2 storey house would be
If you’re thinking of selling up in the near future, there’s one more caveat: spending on finishing the basement may not be worth it, if adding in those costs to your selling price ends up putting your home far above the local average. If it does, you likely won’t get a solid return on investment and might instead consider investing that money in other
upgrades that can improve your sale price. Talk to a local realtor and find out what your home is worth, with and without a finished basement and how it would compare with other recent sales in your area.
