Sales price per square foot

Sometimes real estate prices are measured by the price of each square foot. This allows for a better comparison between differently priced homes as well as homes of different sizes. In this pricing measurement method, the median or mean price of a home is divided by its square footage. For example, a 1,243 sq. ft. home was for sale for $465,000. To find the per square foot price, the price of $465,000 is divided by the square footage of 1,243. The result, $374.09, is the price per square foot for this particular home.

To effectively compare neighborhoods, the mean or median home price of a neighborhood is divided by the mean or median square footage. To refer to our example of Willowood Townhomes in Salinas, CA, the sold units in Willowood range from 1,243 sq. ft. to 1,621 sq. ft. The first four units are each 1,243 sq. ft.; the fifth unit is a little larger, measuring 1,621 sq. ft. The square footage of all units combined is 6,593 sq. ft. This number is divided by five, the number of homes for sale, and the result, 1,318, is the mean square footage. The mean price for the sold townhouses in Willowood of $467,600 is then divided by the mean square footage of 1,318; the result is a mean price of $354.78 per square foot. This also includes the lot the home is built on (which varies in size).

In cities where condo's, co-op's & to some extent townhomes & row houses are more prevelant, the prices do not include the land, since that is not owned by the indiviual but the entire association (though older town homes & row houses sometimes are not part of associations). The size of city lots are generally much smaller than those in the suburbs, measuring sometimes a mere 20 feet wide for a 3 or 4 flat apartment building, with little to no land left for vegetation.