It may be a metric world, but real estate clings stubbornly to square-foot measure for pricing and comparing homes. Learning the language of price-per-square foot can be an important tool when shopping for value in a new or resale condominium home. It allows for consistent comparison between homes of varying sizes and layouts.
The calculation on a for-sale suite is to divide the asking price by the number of square feet, giving you the asking price for each square foot. For example, a two-bedroom suite asking $325,000 might be 850 square feet. Do the division and that home is priced at $382 per square foot. Next door, a suite is larger at 940 square feet, but is asking $350,000. To see which might be the better value do the math, and you see the second suite is priced at $372 per square foot. So although the total price is higher for the second suite, its cost per square foot is lower than the first suite.
All other things such as location and the type of construction being equal, the price for each square foot should be reflected in what you see when you step in the door. Look for quality of finishing, the number of bathrooms and a favorable orientation facing garden, say, as opposed to a busy road, and windows with a corner location, rather than windows that face a single direction. In short, if a home is priced $10, $20 or $50 per square foot higher than others, it should be apparent why that is.
A factor to keep in mind is what I call "value concentration". One-bedroom suites are often more costly per square foot than two-bedroom suites, even in the same building. That's because the smaller suite needs virtually the same parking, storage and mechanical services as the larger suite. A second bedroom is mechanically simple and thus less expensive floor area to build. That minimum value can see nice resale suites the size of a hotel room selling in Calgary for $250,000, or $500 per square foot.
Make sure GST on new homes is included in the prices you compare. Prices on the MLS now must include GST, if it applies, but builders' price lists usually quote prices before the GST is added. Rolling the net GST into new-home prices allows you to accurately compare per-square-foot values to resale homes, which are not GST taxable. Of course new homes pay today's prices for land, construction and appliances, so almost always cost something more than resale homes. On that point, though, keep in mind that if you buy "pre-build" in a rising market, the increased value of the home by the time of your possession could out-weigh your net GST cost.
Make sure you know what is being measured. Promotional literature for new condo homes can occasionally include in the total square footage of a suite its deck or a vaulted ceiling, and in townhouses an indoor parking stall or below-grade finished areas. New homes are also measured on a gross-floor-area basis that usually arrives at larger numbers than the eventual Condo Plan measure for suites. For consistency, Realtors are supposed to only refer to the Condo Plan-measured square footage and the interior useable space area that they themselves have measured.
The type of parking attached to a condominium home will affect the price per square foot of the finished living space. Compared to an outdoor parking stall, consider the value of a carport, a secured parking enclosure, indoor but unheated parking, or the ultimate; a stall that is your titled private property in an indoor, heated, secured concrete parkade which is CCTV monitored. To compare the home values, subtract your best guess for the value of the parking from the equation, then decide if you can afford the additional $20,000, $30,000, or even more for the parking upgrade.
Keep in mind the variety of condominium types. An apartment condominium has no basement, finished or otherwise, although it could have a basement storage locker. A townhouse or a villa of equal above-grade square footage to an apartment might be priced higher per square foot because it could offer an additional 50% of floor area in the basement.
Of course, keep location in mind. Even lower-end homes in prime locations can be valued higher than finer homes in struggling neighborhoods. Whether measured in square meters or in square feet, we usually receive what we pay for.
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