Price Per Square Foot: Why It Matters And How It’s Calculated

Price per unit is a concept many people deal with on a regular basis, whether they realize it or not. If you can buy a six-pack of paper towels for $5, or an 18-pack for $14, which one is the better deal?

Of course, comparing homes is a little different than comparing multipacks of consumer goods. Understanding a home’s price per square foot – and what you can learn from that number – can be a bit more complex. Here’s what you should know about the price per square foot of a property.

What Is Price Per Square Foot?

Price per square foot is a metric used in the real estate market to evaluate a home’s value. A lot of factors go into determining the price per square foot of a property. These factors include location, age, condition, number of rooms, lot size, upgrades and renovations.

A high price per square foot doesn’t necessarily mean the home is overpriced, and a low price per square foot doesn’t always mean the home is a steal.

How Big Is A Square Foot?

“Square” measurements are equal to the length times the width of a space.

One foot is equal to 12 inches. So, if you have a space that’s 12 inches in length and 12 inches in width, it equals 1 square foot – or 144 square inches.