Is Price Per Square Foot A Good Yardstick?
Price per square foot is a popular metric when comparing home prices, but there are other factors to consider, including:
Design
A two-story home usually costs less to build than a similar-quality single-story home because a two-story home will have smaller foundation and roof areas.
Similarly, basement square footage costs less to build than above-ground square footage.
Thus, the price per square foot of a two-story home, or a home with a basement, will usually be lower than the price per square foot of a single-story home.
Yet another example is roof design.
A 9-in-12 (steep) pitch hip roof costs substantially more to build than a 6-in-12 (shallower) pitch gabled roof.
And, homes with complex designs will cost more to build than plain, boxy designs.
Size
Smaller homes generally have a higher price per square foot because there’s less square footage over which to apportion the major costs of foundation, roof, HVAC system, appliances, and other items.
That means that a 4,000 square foot home (think big box) will carry a lower price per square foot than a 2,000 square foot home if everything else is equal (quality, lot value, materials, amenities, etc.).
Lot Value
The value of the lot can significantly affect the price per square foot of a home.
For example, building a small home on an expensive lot will result in a high price per square foot.
Conversely, building a large home with a simple design and few amenities on an inexpensive lot will result in a low price per square foot.
Amenities
Slab granite counters, Viking commercial-quality kitchen appliances, Travertine walk-in showers, and Brazilian Chestnut hardwood floors all cost more than laminate counters, Magic Chef appliances, fiberglass tub/showers with plastic shower curtains, and linoleum floors.
The bottom line?
What’s in the square feet is often more important than the price per square foot.
June 1st, 2012 Posted in Inside Real Estate |
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