NEW YORK (CNN/Money) - Call it the underground movement.

Homeowners nationwide are giving dark, damp basements a new lease on life as the search for space continues. Some 1 million unfinished basements, in fact, get a face lift each year, according to the Tampa-based Home Improvement Research Institute. It's easy to see why.

Depending on where you live--and what you do--adding on to your house runs about $150 to $200 a square foot. Finishing a basement? $30 to $75. Tru Davis, a Massachusetts contractor specializing in basements, is blunt: "Where else can you spend 12 percent to 15 percent of the cost of your house and get one-third more space as a result?"

Most contractors agree it's the idea that you're transforming an asset that was just sitting there doing nothing that encourages homeowners to get creative. They put in media rooms, home gyms, storage space and playrooms.

Indeed, basements offer much potential. But they're not without challenges.

Of the 59 million owner-occupied homes in the United States, just over half have a full or partial basement. Those are the easy ones. Houses built right on a slab, most common in the South, are impossible. Those sitting on crawl spaces often require digging down--or out. Then there are the systems that are often housed in the basement: electricity, water, plumbing, support beams, heating, venting. Finally, there's dampness.

Nevertheless, says contractor Tom Owens of Neil Kelly Designers in Portland, Ore., there are ways to make even the smallest space useful. Waterproofing consultants can--and should--dry out a wet basement before construction begins. One solution: french drains, a gravel bed around the perimeter of the basement. Even a tall, narrow space, common in houses built on a steep hill, can be turned into a "walk-out," with access to the garden through sliders or french doors. Windowless basements make perfect home theaters.

Tops on the wish list of many basement finishers is an extra bedroom and bath for a live-in babysitter or frequent houseguests, according to contractor and creator of the BasementIdeas.com Web site, Dave Schrock. The new suite can't be its own apartment without the proper permits, but it can come fairly close. And it can restore some sense of privacy to your home.

There are a few hurdles to clear. The first is that any bedroom must have an exit. Where windows exist, you might consider creating a door and digging a well outside with built-in steps.

With the bath, plumbing can present problems, too. If there's a waste line under the concrete floor, typically your contractor will connect to that. If there's no convenient waste line, you can have a sewage ejector pump--essentially a sump pump, but bigger--installed. As for newer, single-unit systems that flush waste up to the pipes on a higher floor, Owens calls them an accident waiting to happen.

The best bonus about putting an exercise room in your basement is not the money you save on gym memberships or the time you save on trips to the health club. Fitness expert Stephanie Oakes of the Discovery Health Channel says it's that you'll really find time to work out: "For some reason, when people say 'I'm going to put in a gym,' as opposed to a treadmill in the bedroom, they actually use it."

To put in a gym with fairly modest equipment (two pieces of cardio equipment plus a weight bench and dumbbells), you need at least 120 square feet of space and a seven- or eight-foot ceiling. Richard Miller, president of Gym Source, a New York-based seller of home gyms, suggests covering the concrete floor with rubber at least three-eighths of an inch thick. At $1.40 to $5 a square foot, it's considerably cheaper and offers more protection than carpet; it's maintenance-free (you clean it with a damp cloth), and it helps to even out floors that aren't quite smooth.

Unless you have a window, a television or stereo system is a must to stave off boredom. Finally, it's best to mirror at least one wall, preferably two, at a 90 degree angle to create the illusion of space.

Looking to establish family night? Start with surround sound systems and a big screen tv.

A modest expenditure can give you a better TV-watching experience in your basement than you have in your living room. If you're willing to spend over $20,000, you can buy something approaching a true theater experience. The equipment matters, of course. But, says audio expert Garrett Oostdyk, "If you spend $5,000 on audio equipment and another $3,000 on room treatment, your system will sound better than if you spent $15,000 on equipment with no room treatment."

What should you get for your three grand? Ceiling tiles, to start. The sort of acoustic tiles you'd see in a recording studio. They cost about $5 for a two-foot-by-two-foot square. Thick carpeting on the floor can also help absorb the sound. So will a "sound-dead" space--a wall with fabric-covered panels or acoustic tiles--at the front of the room, beside or behind the screen. And if you're putting your theater right under a child's bedroom and like to watch movies in the wee hours, you may want a double ceiling with an additional layer of insulation.

If your favorite catalog is Hold Everything and your favorite chain is the Container Store, chances are good that your finished basement will be chock full of storage. As with media rooms and wine cellars, you can spend a mint--or considerably less--on closets and get much the same result.

All so-called closet systems customize a boxy space for your particular needs. The differences are the materials, the finishes, whether a system is built-in or hangs from a track and--the biggie--whether you install it yourself. If you're putting in a cedar closet to store all those off-season clothes, cedar tongue-and-groove paneling looks better, but cedar veneer plywood costs about half as much.

Wine cellars may be a luxury, but they're a luxury lots of Americans want these days. Since Sept. 11, says Bob Orenstein of International Wine Accessories, a catalog and Web site, sales of self-contained wine refrigerators (the sort you might tuck into a dining nook) fell off sharply. But demand for cooling units for built-in wine cellars spiked 30 percent and has stayed high.

Gary Hirschkron, in Portland, Ore., was one of those buying. Walk through the arched doorway into Hirschkron's wine cellar and you feel as if you've entered Tuscany. Make that Techno Tuscany. Hidden in the walls of the cellar is a cooling unit that keeps the wine at 55F and a manual bypass that will boost the temperature of the room to 70F in five minutes without raising the temperature of the bottles by even a tenth of a degree. There's a humidifier to moisten the air, a dehumidifier to dry it out and a phone and high-speed data lines so Hirschkron can monitor his investments there in peace and quiet.

"We had let the kids, now 15 and 19, take over the downstairs," Hirschkron says. The bulk of the newly renovated space went to housing the couple's thousands of books, an area for reading and another for the couple's fitness equipment. The 300-square-foot wine cellar was a bonus. "This used to be a crawl space, so I wasn't taking away from anything else," he insists. "I use it as an office as well."

The price tag--$150,000--is tougher to justify. But you don't have to match Hirschkron's investment to build a wine cellar big enough for 800 to 1,200 bottles. To convert a space roughly eight feet by six feet by eight feet high--after insulation it will be about 300 cubic feet--can run from $3,000 to about $10,000.