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DQOTD: How to Evaluate Home Price via $/sqft???
Old 04-03-2011, 04:02 PM   #1
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DQOTD: How to Evaluate Home Price via $/sqft???

I recognize that land, size and location, have a lot of influence on this metric. But aside from land, in a given area, I am often confused by the wide range in cost per sqft when looking at new homes.

I have seen perfectly decent new homes at about $100-$125/sqft (I live in flyover country) and even cheaper occasionally. Then I have seen other small homes at $200, $300 even up to $450 sqft? They are most certainly nicer, better amenities etc. but I can't grasp them being 2X, 3X or 4.5X nicer or more valuable than the $100/sqft homes.

Aside from land, what runs up the cost/sqft so dramatically? What makes a 1500 sqft home at $595,000 that much more valuable (in all it's meanings) than another 1500 sqft home a few blocks away at $189,000? Both 3 bed/2 bath/2 car garage...
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Old 04-03-2011, 04:13 PM   #2
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Old 04-03-2011, 04:18 PM   #3
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Location, location, location?

Also, remember that asking prices are not selling prices. In my neighborhood, many of the houses for sale are those that have been on the market for years at pie-in-the-sky high prices (and none are selling). Look at the selling prices in your area for a better idea.
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Old 04-03-2011, 04:26 PM   #4
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Any of these factors that affect the monthly cost of ownership beyond principal and interest payments:

  • HOA dues
  • Local property tax rates
  • Energy consumption
  • Public utility expenses (i.e. city water vs. a well, city sewer vs. a septic system)
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Old 04-03-2011, 05:44 PM   #5
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Some companies like to put plants in locations where the locals are desperate enough to bid on that employment with things like low taxes, free land, low interest loans, reduced sewer and water bills for periods approaching a decade.

When such an employer comes into an area they may be a shortage of housing, especially for homes that executives would buy.

All this was a simple way of saying supply and demand. Prices seldom dip badly in University towns unless another big employer goes under.

A military base or an auto plant closing makes for ghost towns.

Washington DC and surroundings have not shared equally in the pain the rest of the nation experienced re the housing crisis and those people mostly had jobs when others got pink slips as imports closed their businesses.
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Old 04-03-2011, 08:08 PM   #6
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Location is the key. Areas of the country demand higher prices. I'm in Florida. Right now you would be crazy to pay more than $80-$90/sq ft. I'm talking about the building, not the land. What a builder would charge to rebuild it. Insurance is based on this rate. My house burns to the ground, I still have the land. A builder could rebuild it for $90/sq ft. Property taxes would consider land value.





780 to
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Old 04-03-2011, 08:54 PM   #7
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There are a couple of factors. (We just sold a house and are about to build).

For one builder we talked to the base price for a specific house to be built on our lot is about $176,000. However, the actual quote for options/upgrades is about $280,000. Now, some of that is to add additional square footage. However, here are some actual prices for upgrades that would be added even if the 2 houses were identical in floor plan.

Converting standard tub/shower to handicap accessible shower only - $1738
Door from Master Bedroom to Porch - $485
Raising ceiling from 8 ft to 9 ft in 3 rooms - $1680
Adding handheld showerheads to 2 showers - $620
Upgrading faucets and hardware throughout house - $1027
Silestone counters in the kitchen in lieu of formica - $8604
Prep sink in island - $908
Adding cabinets and fiberglass sink to utility room - $834
Upgrading windows - $4364
8 can lights in lieu of regular lights - $600
Stone instead of brick exterior - $6600
Upgrading several rooms wood flooring (in place of tile/carpet) - $13,366
Cherry cabinets in kitchen/maple in rest of house instead of standard - $6004
Upgrading roof shingles - $2456
Bronze shower enclosure - $235
Granite counters in master bath - $1500
Undermount sinks in master bath - $500
Wood framed mirrors - $360
Crown molding - $2028
Ceilings painted different color from walls - $1870

I could go on and go. Some differences between similar houses are important functionally. 2x6 rather than 2x4. Better windows. Better roof shingles. More insulation. For some of this you will pay for the added by lower utility bills. Others you won't.

Then there are things that are somewhat functional but also aesthetic. Big ones are things like kitchen counters (Silestone or granite instead of formica). Kitchen cabinets come in a wide range of cost.

Or appliances. There is a huge difference between different appliances. A basic electric cooktop versus a professional range. Or your basic refrigerator versus a $6000 built in very large refrigerator and lots in between.

Lighting. Again, a lot of variation.

Flooring. Some houses have as standard builder's grade carpet and vinyl in the wet areas. Contrast that with ceramic tile in a diagonal (more expensive than non-diagonal) pattern coupled with wide plank, hand scraped wood.

Paint. Like everything else, there is a variation in different quality of paint. Some builders charge more for every room that is painted a different color.

Wide baseboards, tall doors, solid wood doors, wood framed mirrors, crown molding -- It all adds cost.

I could really go on and on. There is just a lot of difference in how you can build two houses of the same size.

We are currently working on house design for the house we are building and are having to make these choices at every turn. Yes, we do want Silestone in the kitchen. No, we won't upgrade the hardware in the secondary baths. Yes, we do want wood in these rooms. No the utility room tile doesn't have to be laid diagonally. We will pay the $4000 to upgrade to the Andersen Series 100 windows, but no we won't pay the extra $6000 to upgrade to the Series 400. Yes, we want raised panel cherry cabs in the kitchen, but flat panel maple is fine everywhere else. No we won't pay to change the ceiling texture and to have different color rooms (but we are still thinking about the white ceilings)...
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Old 04-04-2011, 06:12 PM   #8
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Interesting, thanks for all the insights, especially Katsmeow - I had never seen this kind of detail before, it certainly adds up doesn't it.
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Old 04-04-2011, 06:52 PM   #9
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Quote:
Originally Posted by Midpack View Post
Interesting, thanks for all the insights, especially Katsmeow - I had never seen this kind of detail before, it certainly adds up doesn't it.
It does indeed. When building it can also be difficult to compare prices between builders. For example, one builder was what I quoted below. Very low base price but then charges for upgrades. Basically anything you would want to have is an upgrade.

Another builder we are looking at has a higher base price but that base price includes lots of things that are upgrades for the first builder. So, we have to get a quote for the exact same options on each to figure out if prices are comparable.

When buying an existing house, location also impacts it as several mentioned. If you build a house with lots of upgrades in a location that is lower price it may not appraise for the cost it took to build it while if you built in a more "upscale" neighborhood then it might.

When we were looking at comps when we had our house for sale I saw a house for sale in a subdivision not real far from us and the price per SF was much higher than typical in that subdivision. I looked at the listing and the photos and the owners had clearly gone all out on the interior finishes. Everything was high quality, very expensive stuff. It was gorgeous but those owners were never going to sell it for anything close to what they had it.
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Old 04-04-2011, 07:17 PM   #10
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We will pay the $4000 to upgrade to the Andersen Series 100 windows, but no we won't pay the extra $6000 to upgrade to the Series 400
Kats,
Sorry to nitpick, but I don't believe Andersen makes a 100 series...you probably mean 200, then 400 and their most expensive line is Architecture. I installed Andersen windows in my old house before they created the 200 series of windows a few years back, so they're considered the 400 series now.
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Old 04-04-2011, 08:05 PM   #11
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Kats,
Sorry to nitpick, but I don't believe Andersen makes a 100 series...you probably mean 200, then 400 and their most expensive line is Architecture. I installed Andersen windows in my old house before they created the 200 series of windows a few years back, so they're considered the 400 series now.

Actually they do....

Andersen® 100 Series - Home
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Old 04-04-2011, 08:38 PM   #12
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Kats,
I've never seen this 100 series before. I looked at the regular andersenwindows.com website and they don't even show it as an option. I could only find it by doing a search for this series. Is this something available only to builders? I notice the warranty is only 10/10 yrs vs 10/20 yrs on the 200/400 series. This must be a "value" series based on their product numbering system.
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Old 04-04-2011, 08:49 PM   #13
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Also, remember that smaller homes are often more per sq ft than larger homes when it comes to the cost of construction. i.e. there are economies of scale. Yes, most of the time larger homes have upscale fixtures and such, but there are still economies of scale.
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Old 04-04-2011, 10:35 PM   #14
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Kats,
I've never seen this 100 series before. I looked at the regular andersenwindows.com website and they don't even show it as an option. I could only find it by doing a search for this series. Is this something available only to builders? I notice the warranty is only 10/10 yrs vs 10/20 yrs on the 200/400 series. This must be a "value" series based on their product numbering system.
Umm, I don't know. I actually knew about this series (I did a lot of research on windows) before knowing about this builder that uses it. I would prefer the Series 400 (I've read/heard bad things about the 200) but it is a $10,000 upcharge which is a lot to justify on a house that isn't going to be all that expensive. I'm talking to another builder this week so I'll see what it uses and what upgrades are available.

However if I go to Andersen Windows - Federal Energy Tax Credit - Energy Efficient Windows & Doors

On the bottom left of the page it refers to
NEW 100 Series Products

and then has a link for more info so it is on the main page.
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Old 04-04-2011, 11:36 PM   #15
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I just found it interesting when I choose a window, I look at the type first, casement, double hung, glider, etc, and the 100 series doesn't come up at all. I looked at the spec sheet and these windows are made from wood sawdust and is a composite material that has a hollow core. I know the 400 series is all wood and exterior clad with vinyl. I had to replace 2 window jambs (I was told the 200/400 jambs are interchangeable), so the 200 series must have wood and vinyl clad too. I believe the cost difference is about 20-40% more going from 200 to 400 series. From a security standpoint, don't use double hung windows on the 1st floor from a security viewpoint (or drill a hole thru the jamb and put a 8d nail thru them), the locks won't hold up to a crowbar. I would use casements on the 1st floor instead. Anderesen also makes the vinyl windows for Home Depot stock brand.
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Old 04-05-2011, 12:27 PM   #16
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We are building a one story so the fact that the 100 Series only has single hung didn't bother us. We are meeting with a different builder this week so we will see what it uses. Lots of things to look at, lots of decisions.
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