Price Per Square Foot: Compare Apples to Apples (Part I)

“So what is the average price per square foot for a new home?”

As a builder, we hear this question a lot.

You probably won't like my answer: “Well, it depends on the home.” 

There are so many variables that affect the price of the home, such as:

• Quality of the installers, products and materials
• Style of housing
• Size, location and natural features of the lot
• School district
• Experience of the builder
  

Ask Questions

Builder A offers 2,000 square feet at $77 per square foot and Builder B offers the same 2,000 square foot plan at $130 per square foot. Which is a better deal? The answer is in the details.

You may be getting a 70% efficient furnace in the $77 home. That means you save money on the mortgage but will pay substantially more every month in utilities. Does the $77 home include quality windows or use installers who are trained and understand how to properly control moisture?

Did the $77 home hire trained professionals to do the work you can't see, such as insulation, framing, heating, cooling, plumbing, or electric? Perhaps they did pay a lot to their trim carpenter and painter so they could cover up the little "oopsies" that occurred due to shoddy craftsmanship.

Out of all this, the most important is the quality of your home. Is it well built? Will you be able to live in it for a long time without major remodels or repairs? Or did they build it to last the life of the mortgage (30 years) only for it to become the slumpit for future generations to drive past with disdain?

Open up the hood and look around. These are questions you need to ask when you see someone talking about price per square foot.

Further, since we are believers in Sara Susanka's Not-So-Big-House philosophy, we'd rather build you a comfortable home right-sized to your family and your lifestyle. Not "space for the sake of space". Functional spaces you will use. Wouldn't you rather spend money on a home that is fully utilized versus having a large home with entire rooms you don't use but still have to heat, cool, and clean?

Don't Forget the Lot

Usually the lot, or the dirt you build on, is the single most expensive part of the new home puzzle. Nothing else will effect the bottom line more than the property.

While two homes may be the identical in square footage, the lots they sit on may be completely different. One may be a quarter of an acre in a suburban area. The other may sit on two acres in the country.

Since the lot is usually the largest individual cost in a new home, you could build the same home in two parts of town, one in a ritzy neighborhood and one next to the water treatment plant, and the cost would be very different simply because of the lot location.

You can build a very small home, on a very small lot, with lots of custom, built-ins and spend twice as much as you could building a large home, on a large lot with standard or baseline features.

Basically, comparing homes or builders based on price-per-square foot is like comparing cars based on their cost-per-pound. For example, a BMW Z3 may weigh as much as a Yugo, would you pay the same for both cars?

Are you following me? Would you compare these as being apples to apples? You wouldn’t, would you? It's more like comparing apples to lemons.

Same rule applies to new homes.