When you’re building or buying a home, lot size is an important consideration. How large a lot you need depends on how large the home will be that sits on it, of course, but lot size plays into other considerations as well. For example, if you and your family like to spend time playing games on the lawn or cooking outdoors, you want to be sure the lot size leaves room for that. If you are wondering what is important for building lot sizes, here are some things to consider.
Lot Size As a Factor in the Value of Your Home
As a general rule, homes on larger lots have a higher property value than similar houses on smaller lots in the same area. How much higher may depend on other neighborhood factors.
- The location makes a difference in how valuable a larger plot of land is to home buyers. For example, in some areas, a big front yard is highly prized, while in others, extra space is more valuable behind the home. Lot size rules matter as well. If everything in the neighborhood is at least one acre in size, then a lot that is an acre and a half might not be that much more appealing. However, if some lots are one acre while others are five acres, then the larger spaces will likely bring substantially higher prices.
- Percentages matter when considering square feet and lot size. For example, on a 5,000-acre farm, one extra acre won’t raise the value much, but one acre added onto a one-acre lot doubles the space and may boost the property value significantly.
- Traffic patterns are part of the calculation of how much value more land adds to your home. If you live on a busy highway, potential buyers may not see much value in extra road frontage to maintain. However, a larger lot may be more appealing on a quiet residential cover because you have more options for using that space.
- The potential uses for the extra square feet are factors in how much it adds to your property value. If the additional square footage on the lot is largely unavailable due to easements, drainage issues, or zoning, it probably won’t add much value.
Lot Size When Buying a Home Vs. Building
If you are buying a land/home package from a contractor, you will likely pay more for the larger lot. More land means more prep work, more landscaping, etc., and all those costs figure into the deal. However, keep in mind that years down the road, potential buyers may not be willing to pay that much extra for the additional land when you want to sell your home.
Lot Size and Diminishing Returns
If the first acre of your lot is worth $50,000, does that mean it would bring $100,000 if you had two acres? Not necessarily. The law of diminishing returns says that after the first acre, an additional area will diminish in value the more you add. It’s an important concept to keep in mind when you’re estimating the future value of your property.
Learning More About Lot Size
If you’re looking to build or buy a home in the Grand Rapids, Michigan, area, contact JTB Homes. We can help you find the home of your dreams or the right place to build one. We can help you determine the ideal lot size for your next house and then take you step-by-step through the process of finding just what you’re seeking.