Inevitably when home buyers compare home values, the term ‘price per square foot’ comes up. Before comparing two properties using this method, however, you’ll want to be aware of how exactly square footage is calculated, and how far it goes (or does not go) toward representing the actual value of a home.
What is Price per Square Foot, exactly?
Great question! Many would assume there is one standard manner in which to measure the square footage. In Canada, there is actually no standard method and this can lead to inconsistent results. In theory, the same house could be listed with (at least) two differing square footage sizes, depending on how a realtor or builder makes their calculations.
Understanding how square footage is calculated when you are in the market is important if you wish to compare home sizes. Below, we describe the two methods you’ll likely to encounter.
Method 1: Outer Wall to Outer Wall
One way to calculate square footage is based on the length and width of a home from its exterior walls. While this is a fairly straightforward method, it is important to keep in mind that vinyl siding is thinner than rock veneer, and stucco with six inches of foam will have another width altogether, so will an exterior finishing such as Hardie board. As a result, the ultimate square footage measurements between homes could vary somewhat based on exterior walls and rather than on your actual ‘living space’, which does not necessarily speak to the value per square foot.
Method 2: Room by Room
Another approach to measuring a home is to determine the square footage of each room and simply add all the numbers together. When using this method, including consistent areas between homes becomes key. For instance, when homes are listed for sale, the square footage only includes area above ground (or ‘above grade’), so basements are never calculated; however, closets, hallways and stairways are ‘gray areas’ that may or may not be measured. Some appraisers or builders will include one set of stairs but not another, for example. No one way is incorrect, but it highlights the importance of knowing exactly what parts of a home have been measured when looking at the price per square foot of any given property.
So now what?
The above may seem vague, and that is to highlight that ‘square footage’ and ‘price per square foot’, numbers may provide valuable information about your home, but arming yourself with consistent numbers and knowing how square footage has been calculated in your individual case will always provide you with necessary context.
In part two of our Square Footage series, we will look at what exactly price per square foot can tell you, or cannot tell you, about your home’s value. Read it here.