When It Comes to Home Values, Size Matters. But Not in the Way You Think It Does

Some houses are bought with the heart. Others are bought with a calculator. The smartest purchases, though, usually consider both. That tension—lifestyle vs. investment—is the through-line in this conversation about why smaller homes often outperform larger ones as investments over time in the Upstate.

This isn’t an argument against big houses. Far from it. A larger home can be a beautiful lifestyle choice (memories don’t fit neatly on a spreadsheet). It’s simply a clear-eyed look at how the market, appraisers, and ongoing costs tend to reward the “just enough” house more than the “all the space” house.

Home Values Size Matters (and the market keeps proving it)

Home Values Size Matters: In neighborhood after neighborhood, the smallest livable home typically sells for the highest price per square foot. Not the highest price, but the most per-foot value. Why? Because neighborhoods have a floor—a baseline price driven by location, schools, age, and quality of construction, and amenities. If a community’s floor is, say, $200,000 for a 3-bed/2-bath home, a 1,200 sq. ft. listing that checks the core boxes (beds, baths, garage, decent yard) will still pull buyers who care more about being in that location than about an oversized primary suite.

In other words, once the “must-haves” are covered, the extra square footage is often just… extra. The living room may be bigger, the kitchen a touch wider, and the primary bath more generous—but the functionality doesn’t fundamentally change. Many buyers will happily trade “larger” for “well-located and affordable,” and that steady demand keeps smaller homes’ per-foot valuations strong (and, in some pockets, surprisingly strong).

How appraisals nudge the scales toward smaller homes

Price per foot is only half the story. The appraisal process often reinforces the advantage for smaller properties.

Appraisers line up a subject home against comparables and then make square-footage adjustments to level the field. Here’s the rub: those adjustments are frequently far lower per foot than the market price per foot—think adjustments in the $30–$60/ft range, even when the market is clearly valuing space higher. That means:

• When the subject is smaller than the comps, appraisers subtract a relatively modest amount from the larger comps to make them “match” the smaller home. Result: the small home’s appraised value looks stout.

• Flip it, and if the subject is larger, appraisers add that same modest per-foot figure to smaller comps—often undervaluing the extra size, especially when that size crosses into a different “tier” (e.g., jumping from low-3,000s to upper-3,000s square feet where layouts and bedroom/bath counts can meaningfully change).

No conspiracy here—just a common practice that, in effect, penalizes the big and props up the small. Practically speaking, owners of the smallest home in a neighborhood are less likely to get tripped up by appraisal gaps than owners of the largest.

(If you’ve ever watched a gorgeous, sprawling house “miss” by an appraisal while a tidy, efficient one sails through… this is a big reason why.)

Lifestyle isn’t a spreadsheet—and that’s okay

There’s an honest counterpoint: life is not purely an ROI exercise. Bigger homes can be the right choice for seasons of life, multi-generational needs, or simply the joy of space. Even the investing legend Warren Buffett once mused that renting might’ve been financially “better” for him—but he doesn’t regret buying the house where his family made its memories. That matters.

The takeaway isn’t “always buy small.” It’s “know what you’re optimizing for.” If lifestyle wins for you right now, own that. If future flexibility and resale resilience are your aims, the smaller end of your target neighborhood probably aligns better with those goals.

The unglamorous math that keeps rewarding smaller homes

Beyond market dynamics and appraisals, the ongoing math almost always favors the little guy:

• Insurance: All else equal, smaller homes generally mean lower premiums.

• Property taxes (over time): Counties often reassess near your purchase price initially, but in later reassessments, the smaller footprint can mean gentler bumps.

• Upkeep & updates: Paint, flooring, roofing, HVAC tonnage, kitchen countertops, cabinets—everything scales down with a smaller footprint. (Your budget will notice.)

• Time costs: There’s simply less to clean and maintain. Time is money—and sanity. (Ask anyone who’s dusted a 3,800 sq. ft. set of stairs, then dusted them again two days later.)

• “Stuff” discipline: Smaller homes curb the temptation to over-accumulate. Fewer closets = fewer impulse buys. (Your garage might protest—it’s the first room to become a walk-in closet—but the point stands.)

Why the smallest house in the best-fit neighborhood often wins

Back to that neighborhood “floor.” Because demand is anchored by where the home is (commute, schools, amenities, general condition of the community), the smallest home that still delivers the core livability usually:

1. Finds buyers faster (more people can afford the lower total price).

2. Holds value per foot (competition at the entry point is fierce).

3. Appraises cleanly (adjustments tend to favor the subject).

Contrast that with the largest home on the street: it can struggle to find clean comps, and its per-foot value often looks “soft” beside smaller neighbors—the classic “price ceiling” problem.

(Think of it like airlines: the route everyone needs gets booked first. The jumbo plane with more seats isn’t always the better yield.)

A quick word on “great investments” you may not want to live in

Yes, some “transitional” areas outpace the broader market—sometimes dramatically. But lifestyle truths matter: schools, crime stats, amenities, and comfort levels drive personal decisions. Most people won’t trade daily peace of mind for a speculative 20% appreciation story. There’s nothing wrong with choosing the right-feeling neighborhood and then using size strategically within it.

Practical ways to apply this (without living like a monk)

• Start with the must-haves. Beds, baths, layout flow, a real garage, and outdoor usability. Once those are locked, treat extra square footage as a “want,” not a “need.”

• Compare per-foot values inside the same neighborhood. You’ll see the size/value pattern quickly.

• Watch the appraisal angle. If you’re stretching to the top end of neighborhood size, build plan B’s for appraisal outcomes.

• Plan the upgrade path. Smaller kitchens mean fewer linear feet of counters and cabinets—and nicer materials for the same budget. (Hello, quartz without the gasp.)

• Honor the season you’re in. If space is mission-critical this year, that’s real. Just know what it may mean for resale mechanics later.

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Bottom Line

Smaller homes often make stronger investments because the market prizes location and core livability over supersizing, and because appraisal methods and ongoing costs tend to favor the efficient footprint. That doesn’t mean a bigger house is wrong; it means you should buy with clear eyes. If lifestyle is your north star, choose it and enjoy it. If long-run flexibility, easier appraisals, and friendlier carrying costs appeal, the smallest home in the right neighborhood is hard to beat.

Ien Araneta

Journal & Podcast Editor | Selling Greenville