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Old 03-20-2018, 06:14 PM
 
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This is probably a naive question...we bought our house over 20 years ago and aren't planning to move, so I'm not up on these things. But today an agent dropped off a flier listing recent sales in our neighborhood, including price per square foot.

Basically, there are only three different house models in this tract:

#1 is single-story, ~1000 sq. ft., two bedrooms. These sold for an average of $567/sq. ft.

#2 is two-story, ~1300 sq. ft., three bedrooms. Average of $488/sq. ft.

#3 is two-story, ~1600 sq. ft., three bedrooms plus an extra family room. Average of $430/sq. ft.

There was also one customized house with an added fourth bedroom and a "whopping" 2400 sq. ft. It sold for only $345/sq. ft.

Now, the question that immediately springs to my mind is why does the per-square-foot price go down so significantly, the larger the house gets.

I do understand that the single-story model would be more desirable for senior citizens, the handicapped, etc., and so people will pay more for that.

But beyond that, I feel like I would personally expect to pay MORE per square foot for a larger house (we have the 1300 sq ft model, and I would love to have more space!) We're not talking about mansions here, or houses that are so big or so unique that they have a small potential market, but houses that are all virtually the same, on the "small" side by US standards, and all in the same desirable area with a lot of young families.

Is this a typical pattern, and if so, why? I should add that I'm in south Orange County, CA.
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Old 03-20-2018, 06:18 PM
 
Location: DFW
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Yes, the larger the sqft the price per sqft usually goes down accordingly especially when you talk 1 story verses 2 story homes. One stories have a much larger footprint and foundation than a 2 story. It's much cheaper to go up than to add foundation.

You can usually draw a graph... footage goes up, $ / sqft drops. Of course this is just in general terms, a lot of factors can affect pricing.
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Old 03-20-2018, 06:29 PM
 
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I've never understood the 'price per sq ft' idea. I one time told a friend that was saying how one house was a better deal because of the sq ft price I told him it should actually be price per cubic foot so that a house with 9 ft ceilings or cathedral ceilings would be worth more than a plain house with 8 ft ceilings. I really think he would have gone for it if I hadn't started smiling.
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Old 03-20-2018, 06:54 PM
 
Location: Merritt Island, Fl
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Generally speaking, the price per square foot will be less as you go up in size, with other variables such as location, waterfront, or other special or unique feature not accounted for. There is a fixed cost in a particular area just to get the building built. Those costs become more spread out when you build larger homes. So if cost x amount to survey, blueprints, hooking up to utilities, foundation work, etc, to go a bit bigger does not add as much to the initial plan. So that 1500 sq. ft home won't cost significantly more to build than the 1300 sq. foot one. When calculating cost per sq. foot, this will usually factor in to the different amount.
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Old 03-20-2018, 06:57 PM
 
Location: Austin
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If you're talking tract home communities, you're also talking one lot being the same size as the lot next door, so those lots will have a fixed price. The lot price doesn't go up or down because the house size goes up or down.
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Old 03-20-2018, 06:59 PM
 
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You first have to factor the land cost, which is a relatively fixed dollar amount, regardless of the size of home built upon said tract.

So, let’s say those lots run around $200-250K, then the p/sf equalized out to a degree.

Also. I prefer to price by the cubic foot - how tall are those ceilings.
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Old 03-20-2018, 07:16 PM
 
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Quote:
Originally Posted by Rakin View Post
Yes, the larger the sqft the price per sqft usually goes down accordingly especially when you talk 1 story verses 2 story homes. One stories have a much larger footprint and foundation than a 2 story. It's much cheaper to go up than to add foundation.

You can usually draw a graph... footage goes up, $ / sqft drops. Of course this is just in general terms, a lot of factors can affect pricing.
So you're saying that the footprint or size of foundation is the major factor? I'm sure that's the case in many areas, but I'm not sure it's true here. All the lots are about equally tiny. The 1000-sq-ft single story has a kitchen, living area, and two bedrooms. The 1600-sq-ft two-story has a kitchen, two living areas, and a bedroom downstairs, and two more bedrooms upstairs. If anything the footprint of the 1600-sq ft house is larger. Yet the smaller houses are selling for over $130 more per square foot.
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Old 03-20-2018, 07:18 PM
 
14,263 posts, read 11,568,259 times
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Quote:
Originally Posted by FalconheadWest View Post
If you're talking tract home communities, you're also talking one lot being the same size as the lot next door, so those lots will have a fixed price. The lot price doesn't go up or down because the house size goes up or down.
Quote:
Originally Posted by RoamingTX View Post
You first have to factor the land cost, which is a relatively fixed dollar amount, regardless of the size of home built upon said tract.

Also. I prefer to price by the cubic foot - how tall are those ceilings.
This makes sense. And the two-story houses have high cathedral ceilings over half the downstairs...pretty much a waste of space as far as I am concerned, but it definitely adds up to a whole lot more cubic feet than the single-story.
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Old 03-23-2018, 08:38 AM
 
Location: Raleigh
13,661 posts, read 12,338,208 times
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Quote:
Originally Posted by saibot View Post
Now, the question that immediately springs to my mind is why does the per-square-foot price go down so significantly, the larger the house gets.
There are fixed costs that don't really change based on house. The cost of running in Gas, Electric, Water, etc, are going to be the same if you're running it to a Mansion or a Tiny-House.
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Old 03-23-2018, 08:58 AM
 
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There is a certain base cost to a house. Each house has a kitchen, at least one bathroom, an HVAC system, a roof, and usually a garage. The first three are the most expensive components. Additional rooms are mostly just frame boxes.

So a small house will be more expensive/sq ft because the basic components are a larger percentage of the square footage. I agree with the opinion that $/sq ft is a pretty dumb metric -- I'm not sure why it persists in RE advertising.
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