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:

  1. The lot size was considerable – 9000+ SF lot in an area where the average lot size is smaller – offering upside potential.
  2. 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.

  1. The home needed updating, but the lot was large and offered privacy, as well as opportunity for expansion.
  2. 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.