Get the Most Home for Your Money

Understanding a home’s price per square foot can help you determine if you’re getting a good deal or paying too much. It’s a handy metric when you’re shopping for a home, offering a quick way to gauge whether the seller’s asking price is reasonable compared to similar homes in the area.

Zillow® analyzed the top 50 U.S. metro areas to find the lowest and highest price per square foot for a typical home. As of April 2024, the median price per square foot in the 10 least expensive metros was under $164, with Cleveland being the most affordable at $124 per square foot. On the other hand, the 10 most expensive metros ranged from $328 to $1,004 per square foot. This median figure represents the middle point, where half of the homes are more expensive per square foot and half are less.

Many of these metros also appeared on Zillow’s list of the 25 most affordable places for buyers in 2024. However, not all of these affordable markets had low enough square footage costs to make this particular list, as affordability considers factors like the value of a typical home in that metro, median household income, and monthly mortgage payments with current interest rates and a 20% down payment.

The price per square foot reflects various factors that determine a home’s value, including location, age, condition, and desirable features. But how exactly is this calculated? The seller’s or listing agent typically evaluates a home and finds comparable homes nearby that have recently sold. They divide the sales price by the home’s square footage. For instance, if a 2,000 square foot home sold for $400,000, the price per square foot would be $200.

This metric helps both seller’s and buyer’s agents assess whether a home is reasonably priced. However, it usually only includes finished or heated living spaces, excluding areas like unfinished basements or detached garages, which might still be factored into the overall home value.

Factors beyond location and condition can also affect the price per square foot. For example, the size of the lot plays a significant role. A larger lot might increase the overall home value but could result in a lower price per square foot compared to a smaller home on a similar-sized lot.

When considering new construction versus existing homes, it’s essential to compare them separately for more accurate insights. As of April 2024, new construction homes were generally more expensive than existing ones, though the gap is narrowing.

Price per square foot can also guide decisions about home improvements. For example, finishing an unfinished basement can significantly increase a home’s value, offering a high return on investment.

When making an offer, use price per square foot to discuss with your agent, who knows the local market well. They can help you understand why a home’s value might differ from comparable properties. By understanding the benefits and limitations of this metric, you can better assess if a home is priced fairly or if you’re getting a great deal.

Read the original post here: Top 10 Metros Where You Could Get the Most Home for Your Money | Zillow