Want to know if a house or condo is over priced or a great bargain?
Just figure out the price per square foot.
Of course there are other factors that will influence the price of a house such as school district, size of the lot or land the house is on, if the house has a garage or an ocean view. However, the price per square foot in my opinion really tells it all.
I feel a fair price to pay for your average, suburban, middle class house with standard features is between 90 and 100 dollars per square foot. Lets take a look at the price people are currently paying across the country...
Metro Areas: Most Expensive to Least Expensive (Price Per Square Foot)
|Rank||Metro Area||PPSF||Year-Over-Year Price Change|
|1||San Jose, CA||$418.54||-8.8%|
|2||San Francisco, CA||$367.28||-13.3%|
|3||Los Angeles, CA||$325.42||-16.6%|
|4||New York, NY||$292.07||2.0%|
|5||San Diego, CA||$264.17||-21.2%|
|14||Las Vegas, NV||$136.61||-25.4%|
|20||St Louis, MO||$105.66||-3.0%|
Based on this figure my 890 sq foot * 94.79 per square foot should be worth $84,363.
This is actually what I think my place is worth and I am pretty impressed. When you look at some of the other cities on the list above Detroit you see that the price per square foot is just totally outrageous and has no basis in reality.
Miami was less than $100 per square foot 4 years ago, and that is where it will be 4 years from now.
My advice to all you readers... If you want to know if a price is a good deal, it should be around 100/sq ft. adjusted for inflation.
That's my formula for a healthy, affordable housing market.