Tuesday, August 26, 2008

A new home metric (well, a new home metric to me)

I'm so used to looking at homes in terms of their total asking price, that I was unaware that there are other ways to measure home value.

Business space is commonly measured in terms of dollars per square foot. The Inland Empire Real Estate Blog uses that measurement for residential homes also.

In a post last Saturday about KB Homes' "The Retreat" development, the Inland Empire blog observed the following:

The homes that are selling in The Retreat seem to be fetching in the $130 to $150 a sq/ft range currently. KB is trying to get about $170+ sq/ft for their last few new homes. That must be a hard sell with the REO's asking about 20% less than that.

But KB Homes is now trying to sell the models in The Retreat:

KB Homes thinks they can get over $300 sq/ft. Yes, they are very nice and fully upgraded. But to think they will sell those at that price is ludicrous.

In absolute terms, we're talking about prices in the $1.2 million to $1.4 million range. But the square foot measurement sets things out clearly.

Of course, I don't think that the square foot measurement is universal, even in a given neighborhood. And it certainly isn't universal throughout a region. In a post a few days later, it turns out that $150/square foot is a really good price, relatively:

If you like em BIG, then 25111 Cliffrose St in So Corona may suit you. This home is 4187 s/f and has 5 bedrooms and 4.5 baths. It features all the trendy niceties like Granite, tile floor, crown molding etc. This REO property was purchased new in late 2004 for $625,500 (that was a lot in 2004!). It's gone back to the bank and now it's offered for $369,900. That works out to $88 s/f.

Two more examples of sub $100/sq ft properties are listed here.

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