Cost per Square Foot in Austin Homes

Cost per square foot is a common measurement in today’s home valuation, and Austin is no different.  It is used by Realtors, Banks, Appraisers, and others, but experienced professionals do not use that valuation alone and neither should you.  In this article, we will look into the fallacy of using cost per square foot as the only valuation of a home.  It is my opinion that cost per square foot (s.f.) is one of the least effective tools for measuring a home’s value in the custom home (and especially luxury home) market.

At Jenkins Custom Homes, our typical budget for a single home is over 300 line items.  The factors that affect each line item can be varied and numerous.

Take roofing material as an example.  Is a clay tile roof imported from Italy the same cost as a 20 year shingle roof, or even a concrete tile roof?  I can assure you that it is not.  The import cost alone is much more.  Not to mention the necessary framing changes to accommodate the weight of the tile, the numerous flashing and underlayment options, etc.  Which do you prefer, two layers of 30lb. felt or ice and water shield?  Maybe you need a combination of the two?  A lot to consider?  Yes, it is.

Do you see my point, though? Just within this one line item – roofing materials – there can be a variety of alternatives, each of which has a ripple affect on the rest of the budget.

Allow me to illustrate further.  Here is an over-simplified example.  Let’s say these are the costs for two different homes – House #1 and House #2.  Both homes are 10′ x 10′ or 100 square feet (SF).

Now, before you decide which house you are going to purchase, look carefully at the difference between these two homes.  House #2 is a whopping  67% more for the exact same 100 square foot!  What a rip-off, right?

Well, House #1 also has no windows.  Meanwhile, House #2 has windows on all sides, a nice covered porch, better appliances and an extra 1/2 bath.  Still want the first house?

My point is that if you multiply those cost differences by 300 different line items, pretty soon the two houses start to look really different even though they are the exact same size.  My suggestion?  Find out what is in the house before you decide what the true value is.  That is really the only way you will know whether the home is a good value or not.

After all, have you ever called a car dealer and asked him for the cost per seat of a car you were interested in purchasing?  Of course not!  And if you did, wouldn’t it make sense for the single cab F150 Pick-Up to cost the same as a Corvette?  They both have only two seats!

Then again, if that were the measure of value, we would all be driving minivans, wouldn’t we?!  Or… would we?!

By: Shan Jenkins, Jenkins Custom Homes