If you’re hoping to buy a house, the very first dollar figure you’ll want to know is the home’s price, of course. But a close second is its price per square foot — and the average price per square foot for a home in that neighborhood (or the median price, which is actually a better representative of the middle ground). Here’s what you should know about these numbers, and how to use them to your advantage as you shop for a home.
How to calculate the price per square foot for a home
Typically, a home’s price per square foot is prominently featured on the listing — both online as well as in those property information sheets you get at an open house.
But a home’s price per square foot doesn’t tell you much on its own. This number is best understood in comparison with similar homes nearby. So your next step should be to type in the city, neighborhood, or ZIP code of interest into a site like realtor.com/local. This will give you the median price per square foot for homes in that area (as well as median asking price, closing price, and number of homes for sale — all useful info during a house hunt).
What’s the average price per square foot for a home?
According to the latest estimates, the median price per square foot for a home in the United States is $123. But that can vary widely based on where you live and other factors. For instance, on the low end, you’ll pay $24 per square foot in Detroit; on the high end, in San Francisco, $810.
Why such a wide range? Well, it’s no secret that certain neighborhoods are considered more desirable than others, and fetch a higher price as a result.
“The hotter the neighborhood, the higher the price per square foot,” says Anthony Stellini, a Realtor with RSR, a division of the real estate firm Nourmand & Associates. But odds are you knew that already. What you may not know is how this info can help you get a better deal on a house. More on that next!
How price per square foot can help you negotiate
When you run your comparison of a home’s price per square foot with the neighborhood median, you’ll be able to suss out whether a place is a bargain or overpriced.
Let’s say you see a home you love priced at $150 per square foot, but then you find that the median price per square foot for the neighborhood is $135. This suggests the home you’re looking at could be priced too high — which spells an opportunity for you to negotiate for a lower purchase price. Just point out to the sellers that homes of similar size in the area are going for much less. Or, conversely, if the median price per square foot is $135 but this home is only $120, you may have a bargain in your crosshairs that you should snap right up!