Using Price Per-Square-Foot to Determine the Value of Your Dallas Home
It is possible that the price per square foot of a Dallas home could be falling while the total price of the home can go up. This can happen because the per-square-foot costs that you read about are based on one of two computations. To figure the price per-square-foot of the home, simply take the sales price and divide it by the total square footage of the finished, livable space. Example: take a 1,500-square-foot home that is listed for $150,000. The price per-square-foot is $100. Maybe the home across the street is 2,000 square feet, and it is listed at $185,000. The price per-square-foot of the larger home is $92.50. Which is a better buy? Let’s take a look.Average Per Square Foot vs Median Price· Average (mean) price per square foot To arrive at the average per-square-foot cost of any home add the square foot cost of each home that has sold in any given neighborhood and dividing by the number of homes that sold. This will get you the average price per square foot.· Median price per square foot The median price is known as the halfway point. It is the exact middle price point. It means that half the homes in any given community have sold above the median price and half have sold below the median price. It is many times used as a more accurate measure of a home’s value. It is better than a mean price, especially when there are extremes highs and lows in pricing in that community. It too is not a clear picture on its own merits. Per square-foot costs are often used in new construction projects. The square foot cost to rebuild your home should it burn down, if it is an older home, is going to usually be higher than the cost to buy it already built. It is generally not a good idea to base the purchase price of a home you are going to buy on either the median or the average per-square-foot costs. Each property is unique, it is not a one price fits all calculation. Home prices per-square-foot can vary greatly based on, condition, location, improvements and upgrades, among many other factors. The powerful DFW MLS system that Realtors use will list the price-per-square-foot right in the listing so that you can avoid these calculations.So is it better to buy a smaller home at a higher per-square-foot or a larger home at a smaller per-square-foot cost? Well, it depends on the typical average square footage of homes in that particular community. I know that many buyers want to buy the largest home possible but it's not always the best financial choice.How Can You Use the Price Per-Square-Foot Help to Determine a Dallas Homes Values?The short answer when it come to : You really can’t. You can't take the average price per-square-foot and multiply it times the square footage of the home you are thinking about buying. It doesn't work that way. The pricing per-square-foot simply gives you average or median ranges which shows you trends. Each value is different especially when you compare a recently renovated and upgraded home against a type property.
Comments (1)
Very interesting info!
Dale Osborn, almost 14 years ago