Square Feet for Home Value?

by Connie Foley

Can You Accurately Determine Home Value Using Sq. Ft.?

In comparing notes with a colleague, Rodger Shaheen, we found that many of our residential clients are quoting price per square foot values for single family homes. Is this really a valid measure of worth? It certainly is for commercial real estate, but residential is a very different animal.

If you are looking at brand new construction, you could determine a base price and then add in upgrades for a fairly accurate value. Even with that, the lot size and location would be a factor. In tract home neighborhoods, with limited style and floor plan choices, it may be just one of the tools you use.

Tract Homes with Few Options

In eclectic neighborhoods, such as Willow Glen, Rose Garden, Naglee Park, etc., the houses are unique in style, age, updates and condition. You may find a small house with high end finishes and charming style right next door to a much larger home with older elements and an odd layout with the smaller home commanding a much higher price. In such a case, the square footage is not the determining factor. We have all heard about “Location, location, location!”. Still, so true! I recently had an agent from the Peninsula, who obviously was not familiar with Willow Glen, ask my why a smaller Spanish style bungalow, just blocks from downtown, was priced the same as a larger, newer cluster home located just 3 miles away. This is like comparing apples and oranges. Here is an example of 3 homes located within 1 mile of each other. Mid-century ranch on a large lot, small Spanish style bungalow on an average lot and a cottage on a small lot. Price per square foot means almost nothing in these cases.

Mid-Century Ranch

Spanish Style Bungalow

Small Bungalow on a Small Lot

Another fact is that smaller homes typically command a higher price per sq. ft. than larger homes.

There is always the question about if the square footage is accurate as well. In older homes, there are often additions made before permits were required or that were never properly recorded with the tax assessor. Was the stairwell included, or perhaps an unfinished basement or garage? The size may have been determined by an appraiser, a previous listing or tax records, so should be taken as an approximation, not as true and accurate information.

My advice is to talk to a local Realtor who is very familiar with the area and ask them to explain the variables in that particular neighborhood. The more you know, the more confident you will feel about buying your home.