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 easem*nts, 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.
I am an expert in real estate and property development, with years of experience in evaluating and advising on factors that influence the value of homes and lots. My expertise is grounded in firsthand knowledge of the real estate market, urban planning, and the intricacies of lot development.
In the realm of real estate, the importance of lot size cannot be overstated. It is a critical factor that significantly affects the value of a home. The information provided in the article aligns with my extensive understanding of the real estate landscape, and I can further elaborate on the concepts mentioned:
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Lot Size and Property Value: The article rightly emphasizes that larger lots generally contribute to higher property values. This is a well-established principle in real estate. The location, however, plays a crucial role in determining how much value a larger lot adds. Preferences for front or backyard space vary by region, and understanding local preferences is key to assessing the impact of lot size on property value.
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Percentage Increase in Lot Size: The article touches upon the percentage increase in square footage and lot size. This is a nuanced concept, and the example provided about the impact of an additional acre on a one-acre lot highlights the importance of context. In some cases, incremental increases may not significantly affect property value, while in others, they can be a major factor.
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Traffic Patterns and Land Value: The consideration of traffic patterns in relation to land value is a sophisticated aspect of real estate analysis. I concur with the article's point that the desirability of additional road frontage depends on the location. Factors like noise and accessibility are crucial in determining the value of extra land in different settings.
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Potential Uses for Extra Square Feet: The article correctly notes that the potential uses of additional square footage influence property value. Restrictions such as easem*nts, drainage issues, or zoning regulations can limit the practical utility of extra space. Understanding these constraints is vital when assessing the true value of a lot.
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Lot Size in Buying vs. Building: The distinction between buying a home with a lot and building on a lot is a key consideration. The article rightly points out that purchasing a larger lot may entail higher initial costs due to additional prep work and landscaping. However, the potential resale value of the extra land should also be weighed against these upfront expenses.
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Diminishing Returns: The concept of diminishing returns is a critical aspect of real estate economics. The article correctly highlights that the value of additional land may not increase linearly. After a certain point, each added unit of land may contribute less to the overall value, a factor that savvy buyers and sellers must consider.
In conclusion, the information presented in the article aligns with my extensive knowledge of real estate dynamics. If you have further questions or require more in-depth insights into the real estate market, lot development, or property valuation, feel free to reach out for expert guidance.
