Outdoor Rooms: The Square Footage Nobody's Counting

How a well-designed outdoor space adds perceived and actual value to a home — and why Phoenix and Scottsdale buyers should pay closer attention to it

A number on every listing sheet that gets a lot of attention: square footage. Buyers look for it, agents quote it, appraisers use it, but there's another category of usable space that is almost always looked over and in a market like Phoenix's, it might actually matter more.

I'm talking about outdoor living space.

When it's done well, an "outdoor room" becomes a second living room, a dining room, a space you use daily where you're genuinely [enjoying] spending your time versus a cheap patch of turf you forget exists. And in the Arizona desert, where we get somewhere around 300 days of sunshine a year, that distinction can become a real conversation about livable square footage.

What Actually Counts as an "Outdoor Room"

This is where I'd push back a little on how most people think about outdoor space. A covered patio is not automatically an outdoor room. A pool with some pavers around it is not automatically an outdoor room.

Just like the interior of your home, intentional design is what makes an outdoor space feel like a room and gives buyers an added value perception they wouldn't feel otherwise.

Think about it the way you'd think about an interior space. Does it have a defined purpose? Is it comfortable year-round, or at least most of the year? Does it have shade, lighting, some kind of climate control (misters, fans, a fireplace for the cooler months)? Does it flow naturally from the interior of the home?

When those boxes are ticked, you're looking at something that functions like additional [livable] square footage. Buyers feel it, even when they can't quite articulate it. They walk into a home that has a well-designed outdoor room and they linger out there. They start mentally placing furniture. They imagine hosting, holidays, birthdays, get togethers. That's the moment perceived value is added.

Does Outdoor Living Space Add Value in Arizona?

In short, YES, but with some nuance worth understanding.

Appraisers don't count a covered patio the same way they count a bedroom. The methodology is different, and in most cases outdoor improvements don't carry a dollar-for-dollar return on investment when you're looking at appraised value.

But what I've seen consistently in the Phoenix market is that outdoor living space absolutely moves buyers. It can affect days on market, offer competitiveness, and in a neighborhood where two homes are otherwise comparable, the one with a thoughtfully designed backyard likely wins. Every. Single. Time.

The value is there just not always explicitly stated on the appraisal. It shows up in how fast a home sells and at what price relative to its neighbors.

What $1M+ Buyers Are Actually Looking For

At the higher end of the Phoenix metro market, buyers aren't asking whether there's outdoor space or not, they're asking what kind. The baseline expectation probably already includes a pool and what's going to separate homes in this price range is the experience around the pool. The shade structure, the outdoor kitchen setup, the fire features, the way the space feels at 7pm in October when the weather is perfect and you have people over.

A lot of buyers coming from California and other coastal markets are also already accustomed to outdoor living as a year-round lifestyle, they expect it. They're not going to settle for a back patio that becomes unusable from May through September. They want smart design, deep overhangs, misters that actually work, fans, strategic landscaping that provides shade and privacy without blocking sightlines.

If you're buying in this market and outdoor living matters to you or if you're selling and you haven't thought about your backyard as a selling point that's worth having a conversation. Schedule a quick consult here.

My Hot Take: Bigger Lots Don't Always Mean Better Outdoor Living

This is one thing I say to clients all the time and it can take them by surprise. There's a real temptation, especially for buyers moving to Arizona from more land-constrained markets, to assume that a bigger lot automatically equals more usable outdoor space. It doesn't and can sometimes works against you.

A lot can look great on paper, half an acre, an acre, maybe more, but if part of that lot is in a wash, if it's in a flood zone, if there are setback requirements or zoning restrictions that limit where + what you can build, the amount of land you can actually use and develop is much smaller than the total square footage suggests. I've seen buyers fall in love with the idea of a large lot and then realize that a significant portion of it is undevelopable. Or that the lot is zoned in a way that restricts the kinds of improvements they were imagining.

There's also the lot splitting question, which is its own topic but it's worth knowing that not every large lot in Scottsdale or Phoenix can be split, and the rules around that vary significantly by zoning designation.

The point is, when you're evaluating outdoor living potential, the lot size is just a starting point. The real questions are: What can you actually build on it? What's the usable footprint? What are the setbacks? What's the existing condition of the space and how much would it cost to get it where you want it?

Those are the questions a good advisor helps you answer before you're under contract, not after.

How to Think About ROI on Outdoor Improvements

Not every outdoor renovation will return its full cost in a sale price. A $150,000 pool and outdoor kitchen package in a neighborhood where the top of the market is $1.2 million is a different calculation than the same package in a neighborhood where homes are regularly selling at $2.5 million and up.

What I'd encourage any seller to do is rather than trying to calculate a precise ROI, focus on whether the improvement closes the gap between your home and the best-positioned properties in your neighborhood. If comparable homes have resort-style backyards and yours has a plain concrete patio, you are giving up negotiating leverage. Closing that gap even partially, is often worth more in a competitive sale than people expect. There's no one-size-fits-all answer, and a lot of sellers either over-improve for their market or miss the improvements that would have had the biggest impact.

Phoenix and Scottsdale are outdoor-living markets in a way that few places in the country can match. The climate, the lifestyle, the buyer pool all point toward outdoor space being a meaningful part of what makes a home valuable here and that's likely not going to change.

If you're buying, don't discount the outdoor room potential of a home that might not have a finished backyard yet. Sometimes the opportunity is in the home that has the right bones. Look at the lot orientation, the footprint, the shade from mature trees or existing structure. Those homes can be a gem if you know what you're looking at and can see past the dirt/concrete. If you're selling, your backyard is part of your sales strategy and it belongs in the conversation from the beginning.

Either way, this is the kind of thing worth thinking through with someone who knows the market, knows the neighborhoods, and isn't going to just tell you what you want to hear...that's kind of my whole thing.

Carlos Moreno is a licensed Real Estate Advisor based in Phoenix, Arizona, US. He works with buyers, sellers, and relocation clients looking to make a move in one of the most desirable regions in the country.