Does building an addition to a house cost the same, per square foot, as building a new house? No. On a square foot basis, adding on usually costs considerably more.
There are several reasons for this.
Adding on involves demolition, removal, and disposal of existing materials.
Existing spaces must be secured and protected from construction and from the elements.
A remodel may include a greater proportion of high-cost space (such as kitchens, bathrooms, and rooms with fireplaces or windows) than would a new house
While the overall scope of a remodeling project is smaller, the details may not be any fewer. Utilities must be both disconnected and reconnected. Permits still must be obtained. The same materials must be ordered and delivered, only in smaller quantities. The same subcontractors may visit the site the same number of times, only to perform fewer tasks per visit.
In new construction, everything is new. The only surprises on a new home site are under the ground. In a remodel, the builder never knows what he will discover when he dismantles an existing structure. There may be rotten wood, something built not-to-code, faulty wiring, plumbing or heating. Repairing these add to the cost.
Is it better to remodel an old house or build a brand new one in a different location? There are pros and cons to each, and much depends on your individual situation.
Some things to take into consideration are:
If you want to remain in your current location, or if you want to move to a neighborhood where there are no vacant lots for sale, it may be better to remodel, even if that requires tearing down an old house.
If the existing house has wiring, heating, plumbing systems or a foundation in poor condition, or if there is extensive dry rot, pest, water, or other damage, the house may not be worth remodeling.
If the existing structure is not big enough and there is not enough room on the lot to expand, remodeling may not be feasible.
What are the difference in cost? Remodeling may or may not be cheaper overall than building new, depending on the situation.
How can I decide whether to remodel an old house or tear it down and build new on the same lot? Compare the costs.
For a remodel, the first phase of the project will be to remove all unwanted material, so that everything you have left will be part of the final house. This may involve removing just a few interior walls and stripping some old flooring, or it may involve removing everything but the bare bones of the frame and foundation. There could be so little debris that could haul it to the dump yourself, or so much that your need to rent a whole series of thirty-yard containers.
For the tear-down alternative, compare the cost of demolishing the whole house and then building newly as much as is necessary to get to the same stage of construction as above.