In real estate, there are numerous factors to ponder when determining the fair market value of a home. One measurement that everyone seems to use is price per square foot, but it’s important to consider this data point in context.
The calculation is basic – list price divided by the square footage. But, prices per square foot can vary significantly based on several factors – lot size, overall condition, age of the home, location, upgrades, and many other characteristics of a particular property.
How do you use price per square foot to help make an informed decision? It should be viewed as a barometer of whether the home is priced appropriately for the area. If it’s on the high side, that’s a tip that there may be something special or unique about the home that would warrant a higher price. If it’s extremely low, perhaps the home’s condition or location is not as desirable as others in the area.
Here are two examples – both high water marks for their neighborhoods:
BURBANK: I recently sold a property in Burbank for $1100/SF. That’s the highest price per square foot sold in 91501 this year! If you were to look at the home, you may scratch your head and ask – how/why? There were major factors that added to the desirability of the property and propelled the price per square foot to the level of other, more updated houses in the area:
- The lot size was considerable – 9000+ SF lot in an area where the average lot size is smaller – offering upside potential.
- It was located in a sought-after neighborhood, positioned in the middle of the block and surrounded by remodeled homes.
SAN MARINO: My recent San Marino listing closed at $1194/SF – a record high in this particular neighborhood of San Marino.
- The home needed updating, but the lot was large and offered privacy, as well as opportunity for expansion.
- Boasts an excellent school district – one of the highest rated in LA County.
Most times it’s not just about the home itself, but the lot, location, and nearby schools and amenities play a major factor in determining value.