Determining Your Priorities Will Go a Long Way in Making the Right Choice
Whether you’re looking to build your dream home in a large or small city, each has its own challenges – and opportunities. Building in large cities often involves taller structures, denser construction, and potentially higher costs per square foot due to limited land availability and higher land prices. At the same time, you’ll get access to more and often higher-quality amenities. In contrast, building in small cities may offer more flexibility in building height, larger lot sizes, and potentially lower construction costs due to less stringent zoning restrictions and lower land prices. But building in a smaller city may leave you with a slower-paced lifestyle and fewer amenities to enjoy.
Regardless of where you choose to build, constructing your own home is almost always beneficial. And since Davis Custom Homes has experience with building in both Houston and countryside areas of Iowa, we’re uniquely positioned to help you decide whether a large city or a smaller one would be right for you. Let’s go over the key considerations you’ll want to keep in mind when deciding where to build.
Land Cost and Availability
Land in urban areas can be very expensive to buy, which will obviously impact your overall budget. There’s also simply less of it to go around, so you might be forced to purchase a plot in a neighborhood you otherwise wouldn’t want. However, land in and around smaller cities is often more affordable and allows for larger lot sizes.
Property Taxes
In Harris County, of which Houston is the seat, the average property tax rate is 1.77%. Meanwhile, the median effective property tax rate in Sioux Falls, SD is 1.69%. While this doesn’t sound like a large difference, remember how expensive housing is. A home assessed for $500,000 in Houston would come with an annual property tax bill of $8,850, while a home assessed for the same amount in Sioux Falls would have a property tax of $8,450 – a $400 difference. When you remember that the national median is only 1.02%, the bill feels even larger.
Infrastructural Limitations
Smaller cities typically have fewer zoning restrictions, which gives you the potential for a larger range of building types, including single-family homes, duplexes, and multi-unit dwellings. Bigger cities have more zoning restrictions as well as more building regulations and red tape. Depending on the city you choose to build in, you might also be dealing with aging infrastructure to support your home (power grid, pipes and sewage, etc.). An older city that isn’t growing as much might be making do with older infrastructure, while a newer city that’s still growing might have comparatively newer infrastructure.
Speed of Construction
Bigger cities may have more delays due to zoning restrictions and building codes. Also consider the sheer difficulty of getting around a big city thanks to traffic delays and parking scarcity. If it takes longer for the workers and supplies you need to build your home to simply get there, that extra time will eventually add up to a longer construction window.
Investment Returns
Larger cities may offer higher returns due to factors like access to amenities. After all, large cities are large because lots of people want to live there! However, returns in larger cities can also be more volatile. Building in a smaller city may leave you with smaller returns overall, but they could show steadier growth with fewer market-driven ups and downs.
Growth Potential
While major cities like Houston, Dallas-Fort Worth, and Omaha can yield strong returns and offer vibrant, well-established markets, they’re not the only smart choice for new builds. Surrounding suburban cities—such as Pearland, Katy, and League City near Houston, or Frisco, McKinney, and Burleson outside of Dallas-Fort Worth—are experiencing tremendous growth. These areas often offer lower land costs, less competition, and more flexibility, all while staying closely connected to big-city job markets, infrastructure, and amenities.
In fact, recent data suggests that cities with populations under 3 million have become increasingly conducive to economic growth—especially when they’re tied to larger urban regions. Suburban markets like Papillion, Gretna, and La Vista near Omaha reflect this trend, offering a compelling mix of accessibility, affordability, and long-term value.
Whether you’re drawn to the energy of a major metro or the scalability of a growing suburb, both options present unique advantages—and we’re here to help you find the best fit for your vision.
Lifestyle Fit
It’s the old “city mouse and country mouse” debate. Do you prefer scenic landscapes and tranquility, or do you easily become bored if there’s not much going on around you? Simply put, smaller cities generally offer quieter living, while larger cities offer better access to shopping, restaurants, sports, nightlife, arts and culture, and of course, job opportunities. Smaller cities also usually offer a better sense of community. Finally, smaller cities typically, but not always, have lower crime levels than larger cities do.
How Our Experience in Multiple Markets Sets Us Apart
Davis Custom Homes has experience building homes in many different places, including Houston, Omaha, and Iowa. Therefore, our team can help people decide whether a larger or smaller city makes more sense for them. We are a full-service custom home builder that can work directly with clients to achieve the best results possible. If you’re considering building a custom home but need some help deciding if a larger or smaller city is right for you, we invite you to contact our team to schedule a consultation.