Apr. 14, 2006: Many factors affect a home's value in the Phoenix real estate market
Buyers will try to compare homes on a price-per-square-foot basis, but this is useful only for highly comparable homes - similar square footage on similar lots in similar neighborhoods.
Same subdivision is good. Same builder is better. Same exact floor plan is best.
The more differences there are between the homes, the less comparable they are and the less useful it is to compare their price per square foot.
There are a lot of reasons for this, the three most important being location, location and location.
The desirability of the underlying dirt is the overriding consideration. Even within the same subdivision, it matters where the lots are located, how big they are and what value-added features (or value-subtracting detractions) they are near.
Other factors come into play as well. In general, multistory houses of a given square footage are cheaper to build than single-story homes of similar size. The roof alone will be much cheaper.
In the same way, the exterior perimeter of the home will affect its construction cost. The closer a house comes to a pure rectangle, the cheaper it will be to build. We want variety in our shapes, so builders add costly external ornaments to what is in reality a rectangular shape when viewed from the inside.
Ultimately, though, price per square foot can be misleading because it tends to treat all space equally.
The costliest space in a home is the kitchen. After that come the bathrooms and any space with running water. Mere bedrooms, dining rooms, family rooms, game rooms, dens, etc., are very cheap by comparison.
The exterior walls of the home are expensive because they have all the framing, the heavy insulation and the wiring. Interior walls are wood framing wrapped in sheetrock.
True value-added features matter a lot: Extra bathrooms, soft-water loops, security or home-theater pre-wiring, central vacuum systems, fireplaces, etc. Relatively unimproved extra space matters a lot less in pricing a home.
This is why 1,200-square-foot homes can sell for a lot more per square foot than 2,400-square-foot homes.
Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.
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