Price Per Square Foot in Real Estate: When Data Makes Us Less Informed
As professionals, we’re often as fascinated by real estate statistics as consumers are. Price per square foot is one of the metrics that is frequently quoted in attempting to value homes for sale, and it has become a ubiquitous stat on real estate listings.
While it’s an interesting piece of data for new condominiums sales, it’s not enough for resales. Price per square foot is a number that boils down dozens of unique factors in a house or condo and attempts to bundle them into one tiny package. Unfortunately, all it really does is instill a false sense of confidence. It takes away all of the unique, broad, and interesting features of the home that allow us to effectively evaluate its worth and instead melts them into a beige, unremarkable mass.
Price per square foot as a means for supporting a valuation is lazy. It ignores view, geographic orientation, floor plan, upgrades, nearby amenities, and property condition and gives the impression that it can encompasses them all with a single number.
As real estate agents, we often struggle to explain this to our clients. They feel more informed when websites are crunching data into these
easy-to-digest figures, and often think we’re being disingenuous when we tell them to go over statistics like price per square foot when evaluating a home for sale.