What is Price per Square Foot?
Price per square foot
is a calculation of the value of each square foot of area of a house, condo
or any building. It is a simple, but useful calculation that is mostly used to compare similar properties. The price per square foot
can be calculated on the list price or the selling price.
If a 1232 square-foot condominium unit sells for $127,500, the price per square foot would be $127,500/1232ft2 = $103.49/ft2.
So each square foot of that condominium costs the buyer $103.49.
Per square foot is often abbreviated as “psf” in the real estate industry. So in the above example, the amount would simply be written “103 psf”.
Real Estate Agent Says
The price per square foot typically decreases as the square footage increases, so comparing properties that are vastly different from each other size-wise is not recommended. But when comparing homes of similar size, the price per square foot becomes the first metric used in determining the value of a home. Price alone doesn’t really tell you much about something, because you need to know what you’re getting for that price.
Why Does It Matter?
Price per square foot gives you a way to monetize each square foot of a property. It is a great way to compare like properties but also to see what other factors do to a property. Differences like location, style, age and condition are all better explained by price per square foot than by just price alone.