business3.jpg

Blog

Part 2: What does Price per Square Foot Say about Your Home Value?

Posted on February 1, 2018 by Peter-John Woolf

Value-of-price-per-square-foot-home-calculations.png

In part one of our Square Footage series, we examined the various ways a home’s square footage can be calculated in Canada. Given that square feet can be determined using inconsistent methods, it is important to know how your potential home, has been measured.

For a recap on how to calculate the square footage, see this blog post.

As you may already know, the next step is a simple equation:

Asking price / square footage = a home’s price per square foot.

But what, exactly, does this number tell you about a home’s value? Before making the biggest purchase of your life, let’s explore what this number can and cannot tell you when valuing your home.

Factors in House Value

Materials, finishings, and even the trades who build each component of your home play a major role in the price, and value, of any home. In addition, you’ll find some rooms are more expensive than others, naturally.

For example, one of the most costly rooms in your home will always be the kitchen. Built-in cabinetry, appliances, countertops, and unseen items such as electrical outlets, gas hook-ups and plumbing, even speakers and lighting can really add up. Two kitchens of the same size can easily be priced very differently with the range of selections available. Selecting a builder with a high-quality standard offering helps ensure you have a fantastic kitchen without having to add on many unexpected costs after choosing your home.

On the opposite end, rooms without built-ins or appliances (perhaps a bonus room) can be quite simple while adding significant square footage to your home. Should you choose to dress these rooms up (for example, by adding an entertainment centre to that bonus room), the price per square foot will clearly rise, but this is up to you. When shopping for a new home, it is entirely up to you where you focus your dollars and which features add more convenience to your lifestyle.

Adding a deck or triple-car garage to your home is always a plus. While this will affect your construction costs and certainly make your space more customized to your lifestyle, it won’t technically add square footage to your home. Remember there may be real bonuses (like these) in a home when you are evaluating the ‘price per square foot.’

Price per Square Foot as a Guide

While price per square foot alone does not always explain the features and craftsmanship in a home, this number can be an effective guideline in a general sense. Educating yourself on the average price per square foot of a condo vs. a house, or in a particular area of the city can help you narrow down what product type you are looking for. Once you’ve established a baseline, take some time to learn what has gone into a particular house and judge its value for yourself.

With all of this said, remember to consider all of the pieces that go into making your next home one that fits your lifestyle and maintains its value over the long haul. And never forget to choose the home that will feel best when you walk in the door after a long day, cook a meal for friends and family, or spend special moments with your loved ones.

Topics: new home build, real estate market, buy a new home