THE GLASSON GROUP INSIGHT
Why price per square foot can mislead
The metric is useful for orientation. It is not a valuation method by itself.
Two homes can sit close together and share similar size while offering very different land, water access, architecture, condition and insurance profiles. A simple division of sale price by living area compresses those differences into one attractive but incomplete number.
A stronger analysis begins with buyer substitution: would a serious buyer reasonably choose between the subject property and the supposed comparable? Then it adjusts for the features that changed that choice.
Compare like with like.
Begin with homes a buyer could realistically choose instead. A renovated home and one requiring substantial work may share a floor plan but answer different needs. A view, outdoor living space or a more practical layout may influence the decision without appearing in the interior square-footage figure.
Build a short comparison sheet.
- Confirm the source and definition of the reported living area.
- Separate asking prices from closed-sale prices.
- Compare condition, layout, setting and outdoor space.
- Record significant differences rather than hiding them in an average.
Use the number to ask a better question.
When one property differs sharply from the others, investigate why. Price per square foot can identify something worth examining; it cannot tell you whether the difference is justified.
This analysis is general information, not an appraisal or property-specific recommendation.