City-Data Forum How is cost per square footage calculated?
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09-26-2019, 09:20 AM
 6,809 posts, read 3,757,851 times Reputation: 6258

Quote:
 Originally Posted by thebigW Take the price of the home, subtract the value of the land, improvements, ancillary improvements, amenities, and updates. Divide the number you have left over by the sq. ft. Or, use \$50/sf, which is pretty standard around the county, at least until you get over \$1M.
No way is \$50/sq ft "pretty standard around the country". The median house price in the US is \$226,800. The median house size in the US is 2386 sq ft. For each of these numbers half cost more/are bigger and half cost less/are smaller.

That yields around \$95 a square foot.

I'll grant there are regional differences, so in some places \$50/sq ft might be usual and customary, counterbalanced by \$200/sq ft elsewhere.

09-26-2019, 11:18 AM
 465 posts, read 418,289 times Reputation: 1237
Quote:
 Originally Posted by markjames68 No way is \$50/sq ft "pretty standard around the country". The median house price in the US is \$226,800. The median house size in the US is 2386 sq ft. For each of these numbers half cost more/are bigger and half cost less/are smaller. That yields around \$95 a square foot. I'll grant there are regional differences, so in some places \$50/sq ft might be usual and customary, counterbalanced by \$200/sq ft elsewhere.

Actually, the \$50/sf comes from FNMA. They have been collecting data from appraisers for the last 10+ years.

When you divide sales prices by GLA, it completely ignores the first three rules of real estate, and a number of other factors.

09-26-2019, 01:00 PM
 Location: Living on the Coast in Oxnard CA 15,994 posts, read 27,169,509 times Reputation: 20927
Quote:
 Originally Posted by thebigW Take the price of the home, subtract the value of the land, improvements, ancillary improvements, amenities, and updates. Divide the number you have left over by the sq. ft. Or, use \$50/sf, which is pretty standard around the county, at least until you get over \$1M.
\$50 a square foot? The average cost to build a home is \$103 per square foot.

09-26-2019, 02:05 PM
 6,809 posts, read 3,757,851 times Reputation: 6258
Quote:
 Originally Posted by thebigW Actually, the \$50/sf comes from FNMA. They have been collecting data from appraisers for the last 10+ years. When you divide sales prices by GLA, it completely ignores the first three rules of real estate, and a number of other factors.
Sure, but again I'm using the MEDIAN values. Maybe I'm an outlier but having lived in 3 homes over the past 10 years in 3 different states neither was anywhere close to \$50 a square foot appraised value.

First appraised at around \$320 a square foot. Second was around \$300 a square foot. Current is around \$105 a square foot including the finished basement (and it's a big house) or around \$145 without.

If I look at a place like Iowa, the median list price is around \$130 a square foot. In Oklahoma, \$106 a square foot. I looked at a bunch of others in lower cost areas and generally they fell in between or near these.

I don't see how homes can appraise at a "pretty standard value around the country" of \$50 a sq ft....

09-26-2019, 03:16 PM
 465 posts, read 418,289 times Reputation: 1237
Quote:
 Originally Posted by markjames68 Sure, but again I'm using the MEDIAN values. Maybe I'm an outlier but having lived in 3 homes over the past 10 years in 3 different states neither was anywhere close to \$50 a square foot appraised value. First appraised at around \$320 a square foot. Second was around \$300 a square foot. Current is around \$105 a square foot including the finished basement (and it's a big house) or around \$145 without. If I look at a place like Iowa, the median list price is around \$130 a square foot. In Oklahoma, \$106 a square foot. I looked at a bunch of others in lower cost areas and generally they fell in between or near these. I don't see how homes can appraise at a "pretty standard value around the country" of \$50 a sq ft....
The difference between your examples of \$320/sf vs \$105/sf, I would bet, is the land, not the dwelling.

If you have a 2,000 sf home that sold for \$400,000 and you are trying to determine where a home that is 2,200 sf would sell. You would NOT do 200sf * \$200 = \$40,000. It would be more accurate at 200sf * \$50 = \$10,000.

The \$400,000 was just not four walls floating in space. There was location, land, upgrades, garage, pool, porch, fence, etc. Size is only a portion of the overall price.

09-26-2019, 04:42 PM
 6,809 posts, read 3,757,851 times Reputation: 6258
Quote:
 Originally Posted by thebigW The difference between your examples of \$320/sf vs \$105/sf, I would bet, is the land, not the dwelling. If you have a 2,000 sf home that sold for \$400,000 and you are trying to determine where a home that is 2,200 sf would sell. You would NOT do 200sf * \$200 = \$40,000. It would be more accurate at 200sf * \$50 = \$10,000. The \$400,000 was just not four walls floating in space. There was location, land, upgrades, garage, pool, porch, fence, etc. Size is only a portion of the overall price.
Ah, fair point. Would need to take away the land value.

But how can the average still be \$50 when it costs north of \$150 to build new not including land?

09-26-2019, 05:01 PM
 465 posts, read 418,289 times Reputation: 1237
Quote:
 Originally Posted by markjames68 Ah, fair point. Would need to take away the land value. But how can the average still be \$50 when it costs north of \$150 to build new not including land?
First, there's depreciation.

But, mostly, it's because the extra sf doesn't actually cost \$150 to build. Take two houses 1,000 sf and 2,000 sf, both 3 bedroom/2 bath. The 1,000 may cost \$150/sf to build because it has all the expensive things spread over a smaller number, kitchen, baths, plumbing, electric, planning, permits, profit, landscaping, etc. The extra 1,000 sf of walls is much cheaper. If the smaller house cost \$150,000 to build, the 2,000 sf won't cost \$300,000.

The \$150/sf you see is more like \$200 for the first 1,000 sf and \$100 for the next 1,000 sf. (Not actual, but you get the idea).

09-26-2019, 05:28 PM
 Location: Living on the Coast in Oxnard CA 15,994 posts, read 27,169,509 times Reputation: 20927
Quote:
 Originally Posted by thebigW First, there's depreciation. But, mostly, it's because the extra sf doesn't actually cost \$150 to build. Take two houses 1,000 sf and 2,000 sf, both 3 bedroom/2 bath. The 1,000 may cost \$150/sf to build because it has all the expensive things spread over a smaller number, kitchen, baths, plumbing, electric, planning, permits, profit, landscaping, etc. The extra 1,000 sf of walls is much cheaper. If the smaller house cost \$150,000 to build, the 2,000 sf won't cost \$300,000. The \$150/sf you see is more like \$200 for the first 1,000 sf and \$100 for the next 1,000 sf. (Not actual, but you get the idea).
See I would think, bigger house has more expensive things. A smaller house is not going to appeal to someone buying a larger home. The larger home buyer is not going to settle for lower priced items.

09-26-2019, 05:55 PM
 1,415 posts, read 2,112,876 times Reputation: 1009
Quote:
 Originally Posted by SOON2BNSURPRISE See I would think, bigger house has more expensive things. A smaller house is not going to appeal to someone buying a larger home. The larger home buyer is not going to settle for lower priced items.
That's not necessarily true, perhaps once you get above a certain size threshold (e.g. 4000) and therefore base price it may start panning out that way. Consider, however, that many folks will actually scrimp on the 'nice stuff' in order to get that extra square footage and upgrade later.

But isn't the gist of most of the posts that one can't take the \$/sqft as a gospel number. There are way to many factors to generalize for all situations and all locations. I find it useful myself as a data point because of my local market and my own RE goals. I totally get how many don't find it useful at all for any number of reasons.

09-26-2019, 06:05 PM
 Location: Columbia SC 9,363 posts, read 8,095,906 times Reputation: 13100
Quote:
 Originally Posted by Annemieke Roell Except that the \$price includes everything else such as garage, outbuldings, etc. which make this unreliable and appraisers don't use it.
While I am not saying that price per sq ft is valid, I have never seen garages, out buildings, etc. counted. Maybe it is an Oakie thingy.
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