Why square foot for the dollar is almost meaningless in real estate

OHGoodness... I HATE the pricing by per square foot price approach and have written thousands of words on the subject, but the analogy of "do you buy your car by the price per square foot?" really nails it! 

Having lived in Hong Kong, I'd choose it in a heartbeat! Not really a fair comparison - Hong Kong is a tiny area, where every inch of land is precious, hence the high prices. 

Yes, I agree. The only time it matters is when you are pricing out a floor. The home itself by square foot doesn't mean much to me. I was actually surprised when I started real estate that our area focuses very little on it. Acreage is another issue in my area.  If you can only build one home on a eight acre property, then it wont sell to a builder for much more than a single acre. No return on the property and no added value.

Although $/sf often doesn't tell you much per se there can be exceptions. New construction is an example. One of our local builders offered an alternative layout with an additional 100sf in the form of a 4th BR or den for only $5,000 more compared to the basic design priced at $175/sf. Many buyers saw this as a great deal, even those who bought the 3 BR version!

Jim, good point - however, it's all about location, location, location - correct?

Quite correct Praful. I once built a home on a $20,000 lot and sold it for $415,000. The same house on a $45,000 lot I looked at in a very upscale neighborhood would have yielded about $600,000.

Olga Simoncelli, i'd love to hear more about Hong Kong.

MayI repost this and relate it to feng shui?

And the other things is, do they even measure square footage the same?   Price per square foot is meaningless (even just as a math equation) if the square footage in one area includes a finished basement and in the other doesn't.

This is so true.  I am looking at downtown condos which can equate to a very different $/sq. ft. when compared to a home in the 'burbs!

Great analogy, although I'm not sure I would have the courage to ask one of our buyers if they bought their vehicle by the pound. :)

I normally determine price by market value.

Good examples Jim of creating some low cost SF. My favorite way to get a really low-cost/SF house is to use all the space in the building envelope like finishing attics and cellars. The space is there so why not use it. There are challenges, however, like zoning resolutions, building codes, an accommodating design, waterproofing and insulating to mention a few. Also, not all buyers value using these types of spaces for living purposes.