$/sqft Comps

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Submitted by Noob on July 9, 2008 - 9:21am

I have a general question regarding the use of $/sqft comparisons

. I frequently see comparisons drawn by real estate pros between houses with different numbers of bedrooms. For example, a 2/2 1500sqft home sold for $XXX per sqft while down the street, a 4/2 2200sqft home sold for $YYY per square foot.

My question is that since bathrooms and kitchens cost more to build per square foot than do bedrooms, is this a valid comparison?

A 1 bedroom house has an expensive bathroom and kitchen and a smaller proportional amount of square footage for the cheaper bedroom. Wouldn't one expect to pay a much higher price per square foot for a one bedroom place than for a four bedroom place?

What are the limits of a valid comparison? Only between homes of equal numbers of bedrooms?

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You are quite right Noob. #
Submitted by EconProf on July 9, 2008 - 9:34am.

You are quite right Noob. # & quality of bathrooms plays a big part, as does size and quality of kitchen. Accordingly, fewer bedrooms in a house warrant higher P/Sq.ft.
Other considerations: Size of lot--small house on big lot raises P/Sq.ft. Single-story worth more than two story. This is a big factor in "bargain" prices P/Sq.ft. Temecula McMonster houses.

re: price per sqft i hear
Submitted by recoveringrepublican on July 9, 2008 - 8:18pm.

re: price per sqft

i hear realtors spouting things like 'but this is the lowest price/sf in the area' all the time. usually what they fail to realize is that, in san diego, the land component of value is much higher than the value of the improvements. therefore, all else being equal, the larger the home is, the lower per square foot value will be. check it out, the relationship is negative almost every time.

price per sqft is a much better comparison when you're referring to condo units, where there is no land component to value.

But not in my beloved Carmel
Submitted by CVFanGirl on July 9, 2008 - 9:05pm.

But not in my beloved Carmel Valley. Where are some statistics to back this up I wonder.

I ran a regression on Rancho
Submitted by stansd on July 10, 2008 - 7:06am.

I ran a regression on Rancho Bernardo awhile back. I don't remember the exact numbers, but while the price per square foot was around $300 for houses in the area, the coefficient on square footage (marginal price per square foot) was only about $100.

Basically, there is a big ante to get any kind of a house, and the marginal cost of a bigger one is much lower for many of the reasons described above (I think income thresholds also play a role...lots of families making 100k, but many fewer making 120/150, etc....roughly, then, if a 1,500 square foot house is 500k, a 2,500 square foot house would run 600k...numbers aren't perfect since I'm working from memory, but you get the idea.

Stan

The value of square foot
Submitted by XBoxBoy on July 10, 2008 - 9:39am.

The value of square foot comps depends a lot on location. In a subdivision where the homes are mostly the same, sq ft comps are very relevant. In an area like La Jolla, where every house is different, and there are significant differences in the desirability of particular areas, the sq ft comps become much less relevant.

Looking at SDLookup.com for La Jolla, sfr's PPSF varies from $305 to $5995 Obviously a huge varience. I don't know enough about other areas to pick a good example of a zipcode with most houses being similar, so perhaps someone can provide a good example from Temecula or other area.

XBoxBoy