Cheaper land farther from town, or pricier land closer to town?

[amyamanda]

We are looking at some land tomorrow. Our plan is to sell our current home (2400sf, 1 acre, large mortgage, oil heat, not energy-efficient) and buy land to build on with as little debt as possible (hopefully about 10 acres with space for gardening, some animals, a woodlot, and a house lot or even a rustic cabin or other outbuilding).

It seems that the cheaper land that meets our needs is located farther from town, and the more expensive land is closer to town. This makes sense. If all else was equal, living closer to town would be worth more.

Taxes nearer town are higher, taxes out of town are lower.

But driving costs will be higher out of town.

Either way we'll start with SOME mortgage, but with a smaller one we'll get out from under it sooner.

Which is smarter:

- buying land far out of town (say, around 15 miles or 1/2 hour driving from the grocery store and other amenities) and paying less taxes and having no debt sooner?

or

- buying land closer to town (within 5 miles, or maybe 10-15 minutes, of town) and paying higher taxes and having more debt for longer?

(Yes, I know this isn't the time to be selling. And I know with my DH's job longevity in question, it's not the time to be buying. But it's not the time to be staying where we are, either. I would love insight on any of those factors or all three together if anyone wants to offer some... )

If we can trade our existing mortgage payment for a significantly smaller one with lower heating and utilities costs, especially with low taxes, that sounds to me like the most economically stable option. But, the additional driving to the farther cheaper land worries me also.

What would you do?

[lilyka]

I try to live as close to the certer of town as possible. People really underestimate how much they spend driving in and out of town.

[CameronsMama]

Originally Posted by lilyka

I try to live as close to the certer of town as possible. People really underestimate how much they spend driving in and out of town.

I have to agree with this. Just me personally, but with gas prices rising I'm more comfortable being within walking distance of the necessities.

However, if you plan on being close enough to self sufficient (growing all your own food, etc) that you won't depend on trips to town to survive, then the land further out might be better for your situation.

[SleeplessMommy]

You need to compare property taxes and "school quality" between the two locations ... Tax rates will make a huge difference. I would also compare slope of the land (south facing is good), water sources, and perc tests.

Have you looked at small (run down) houses on large lots? That is another alternative.

BTW ... many land purchases by developers are done with contracts for the right to buy. You pay a non-refundable % of the property value, and get the right to buy the property for a fixed value within 12 months. IF you can line up construction financing and permits, you buy the land. If not you walk away.

[Ironica]

Yep, you've discovered something called the bid-rent curve. ;-) In a monocentric town, there will tend to be a pretty direct relationship between distance from the center and land value.

Here's the thing: land prices and transportation prices are interdependent, which is what forms the bid-rent curve. As transport costs go up, the curve will become steeper. Generally speaking, prices will adjust to keep the cost of land + transportation more or less constant.

So... if you expect transportation to get more expensive, that will raise the relative value of land closer to town. If you expect it to get cheaper, then the land farther out will gain value relative to that closer to town. Gas prices are generally expected to get worse before they get better, which means the land closer in will appreciate wrt the land farther out. But... if the area is planning transportation improvements, like new highway miles, rail service, etc., that can lower the cost of transportation (not necessarily just the out-of-pocket cost, either; time is one "cost" to transportation that people do take into account, albeit not always giving it its full weight).

So, contact the planning commission for your city or county or whatever, and find out what's on the table in terms of transportation. Then decide if it affects the land you're considering purchasing. Otherwise, the land closer in is probably a better bet.

[SuzyLee]

With kids the age yours are, you are coming up on prime time to be driving them all over the place for school activities, sports, scouts etc etc. Unless you homeschool and have no friends I would be wanting to live closer to town.

[amyamanda]

Thanks for your replies. I get that living closer to town is more desirable. But I am not convinced it is worth taking on a much greater debt load, you know? I understand that transportation and gas are going to become a much greater consideration, but I also understand the economy is not doing well and that any debt (or even tax obligation) could be risky as unemployment rates rise.

So I think what I'm trying to weigh is the gas/transportation thing against the debt/taxes thing. I'm stuck on the debt part. We don't want debt.

If we could buy land 1/2 hour for town with NO debt, vs. buy land in town with a mortgage, would it be any different?

FWIW, we do homeschool, and we're pretty self-contained (4 kids in 5-1/2 years; they meet each other's social needs almost all the time). We already make do just fine with only 1-2 trips to town a week. We're definitely going to consider land slope, perc tests, and water sources when we look. We're not planning to go the traditional route with building - whatever financing we end up needing or getting (ideally none, but realistically some) is going to have to be the type with no strings attached - not a construction-dependent loan. We are planning to build our house stick-by-stick, ourselves (once the basic things are in place - driveway, septic as far as required by the state, well, foundation, power). It will undoubtedly take longer than the bank would allow.

Ironica, I think I get what you are saying - that one could predict how land prices are going to change based on transportation options, and buy low in an area where prices would rise accordingly, right?

And also FWIW, the property we are looking at tomorrow is within a mile of the actual village center (post office, grange, school), about 6 miles from a tiny town (hardware store, library, general store), and then maybe 15 or so from the big town (supermarket, strip malls, main street with shops, etc). My guess is that as transportation practices shift (i.e. people converging closer to home due to gas prices), the tiny town will get busier and meet people's needs that they formerly had to drive to the big town for. The infrastructure for business is already there. Anyone have thoughts on how that might play out? (I admit, I'm one of those who buys into a Long Emergency-type scenario, and I have that in mind).

I appreciate your thoughts!

[holidaymama]

You know what...personally I would live further out if it meant way less debt and being out of it sooner!

We moved quite a ways out of the main town area...still in a development, but about 10 miles out from anything...why? because we bought our house for about 40K less than if we had bought closer to where we work. So as far as our mortgage, that means about 4-500 less a month in payments. So even though we have to drive more, it only affects our gas bill by 150-200 a month so we still come out ahead I would say.

Now we don't have land, but if you did and could raise some of your own food, and didn't have to worry about a mortgage sooner, you would be much more self sufficient.

Do what YOU think is right...sometimes, you have your mind made up and negative comments here will only make you second guess what you already know you want.

[SleeplessMommy]

I would go with a smaller lot size if that gives you more cash options... you can do a lot of farming on less than 5 acres!

[annethcz]

I vote for closer to town, but that's just me. The longer I live in the country, the more unsustainable it seems to me (even growing a huge garden and raising our own meat).

[Crunchy*VT*Mom]

I grew up in a city and then when I was in high school my parents moved outside of town about twenty minutes. We had horse pastures, chickens, a humongous garden...that sort of thing.

My brother was still in elementary school so he spent most of his childhood living out in the country.

He ~~HATED~~ it. Until he could drive, he was trapped out there at home all.the.time.

And it cost my parents so much money to be driving into town every time they needed to go...and you end up needing to go there more than you think you will. Also, we are a very social family and often people move into the country because they don't want to bother much with neighbors. All our neighbors kept to themselves and kept huge aggressive dogs to make sure no one visited their farms without an announcement. We missed the comraderie of a neighborhood.

BUT...plenty of people love living out in the country and it looks like you have researched this and know what is right for your family, so if I were you (and were that type of person) I would buy the land further out.

[lifeguard]

It sounds to me like the further out is further out from the main city but there are other towns close. To me this would not be a problem. You also sound pretty self-contained, if you were commuting every day it would be more important to consider the gas costs.

I'm biased - I want to be away from people. In emergencies - busy cities make me nervous.

[Purplehaze]

we went for the cheaper land further from town

and I really wish we didn't... commuting costs are killer! And not only Dhs driving but I seem to have to go to "town" (smll city) at least 3-5 days a week myself... dds preschool is there, the gorcery sotre is there, thruft shops, everything and anything pretty much... I wish we had bought there... But we were lulled into buying here by the mantra of "better schools"...

SERIOUSLY, if I were to be buying or selling right now, I would buy as close to my hubbys work as I could afford, if I could get the amount of bedrooms and bathrooms we need. We can't move because for starters Dh HATES moving and I was lucky to get him to move here 15 months ago and we would lose so much money I don't know if we would have enough for a sizable down payment...