Price per Square Foot

Dated: December 20 2021

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Some buyers I have run into seem to approach their search for a home with a single selection method: they want to meet or beat their target price-per-square-foot. This measurement can provide a useful perspective when comparing similar houses to one another, but if you expect too much of it, it can lead you astray. When the living areas of two different properties are fairly close to each other, looking at the price per square foot can explain why the slightly larger house has a slightly higher listing price, and quantify how much more it should cost—all other things being equal. Of course, in the real world “all other things” are never equal, so it’s best to augment a comparison of price per square foot with perspectives on property condition, location, view, and presence or absence of amenities.

There’s another phenomenon that’s familiar to most Realtors but might surprise people without much real estate experience. Properties at the low end of a market category very often sell at the highest price per square foot. Condos and townhomes often command a higher price per square foot than single-family homes in the same area. Homes under 1,000 square feet can sell for a lower total price, but a higher price per square foot, than nearby homes of 1,800 to 2,000 square feet. The reason for this is not that condos are preferable to single family homes, or that tiny homes are in better condition than larger ones. It’s due to market pressure from a large group of prospective buyers. First-time buyers want to become homeowners—they’re willing to pay more per square foot than someone moving up to their second home, because their alternative is continuing to rent. There is also a significant number of buyers who will pay extra for the smallest single-family home, because that’s their ticket to avoid dealing with a homeowners’ association. Price per square foot is one of many ways to compare properties, and differences in that measurement have to be interpreted carefully.

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DAVID DUNLAP

As a residential real estate executive with an extensive background in corporate marketing, I am able to apply unusually strong skills in marketing communications, e-marketing, strategic planning and ....

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Price per Square Foot

Some buyers I have run into seem to approach their search for a home with a single selection method: they want to meet or beat their target price-per-square-foot. This measurement can provide a

Read More