Our favorite metric for comparing home price across cities
When you set out to buy a home, assuming you don’t have unlimited funds, there’s an almost unavoidable trade-off to contend with: In more desirable cities, supply, and thereby space, is scarce. When space is scarce, your money typically buys less of it.
Try not to get hung up on price when you’re house shopping. The sticker price can only tell you so much about the home’s value.
Take your housing budget and divide it by the median price per square foot in that market (there’s some variation among real estate market data tools, so cross-check with Zillow, Redfin, Realtor.com, et al. for good measure). Try to stick with the median list price, rather than the average, as it represents the middle of the market. Averages can be skewed heavily by a few outlandish prices.
If you don’t mind a commute into the city center for work — or you’re part of the work-from-home forever crowd — check out how the price per square foot in your desired location compares to the suburbs and exurbs.
Like any housing metric taken on its own, price per square foot isn’t perfect. A newly built single-family home may command a higher price per square foot than a 50-year-old home of the same size, even in the same city. Plus, lot size isn’t factored in here.
Remember, too, that sometimes it’s about how the space feels. You might find you enjoy a 1,200 square-foot home with an open floor plan, and wind up feeling trapped in a 3,000-square-foot home that isn’t up to date.
Regardless of where you choose to hang your hat, we hope that this metric will give you a useful tool to compare and contrast home prices to get the most for your money. As always, if you have questions about home mortgages, we're here to help!
Try not to get hung up on price when you’re house shopping. The sticker price can only tell you so much about the home’s value.
Check out the price per square foot
When comparing cities — or even neighborhoods — you might find the price per square foot to be a helpful metric. You can find it listed on most real-estate databases.Take your housing budget and divide it by the median price per square foot in that market (there’s some variation among real estate market data tools, so cross-check with Zillow, Redfin, Realtor.com, et al. for good measure). Try to stick with the median list price, rather than the average, as it represents the middle of the market. Averages can be skewed heavily by a few outlandish prices.
Comparing different cities
Take a look at the median price per square foot in some of the most popular cities, sourced from Realtor.com. The database does not differentiate between single-family homes and other types of residential properties, so view these figures as a reference point and not the be-all and end-all.Are you getting a good deal?
Use price per square foot to compare what you could get across and within cities. Compare the price per square foot of recently sold homes in the immediate area to the home you’re looking at. Are you getting a good deal or overpaying?If you don’t mind a commute into the city center for work — or you’re part of the work-from-home forever crowd — check out how the price per square foot in your desired location compares to the suburbs and exurbs.
Like any housing metric taken on its own, price per square foot isn’t perfect. A newly built single-family home may command a higher price per square foot than a 50-year-old home of the same size, even in the same city. Plus, lot size isn’t factored in here.
Remember, too, that sometimes it’s about how the space feels. You might find you enjoy a 1,200 square-foot home with an open floor plan, and wind up feeling trapped in a 3,000-square-foot home that isn’t up to date.
Regardless of where you choose to hang your hat, we hope that this metric will give you a useful tool to compare and contrast home prices to get the most for your money. As always, if you have questions about home mortgages, we're here to help!