Why Price Per Square Foot Is Not the Answer

Next weekend on April 8 and 9th is the Spring Preview of Homes with 27 entries from Anchorage home builders. Unlike the fall Parade of Homes, entries may be in various stages of construction providing visitors an inside look at the framing, electrical, drywall and trim stages of homes. One frequently asked question is ‘What is the price per square foot of this home?’ Visitors may find prices between $186 and over $300 per square foot. So what can create almost a doubling in costs? First, let’s look at location. What is the difference in value and cost between a 6,000 square foot lot and an acre home site? How about well and septic systems on that acre lot versus public water and sewer that is already calculated in the price of the lot? Then, let’s look at topography and soils conditions.  Does the lot need gravel import and if so, how much? Will the septic system be for a three bedroom home with a den or a four bedroom? What about the length of the driveway? The minimum driveway setback in Anchorage is twenty feet but a pie shape lot requires the home to be set back further which adds cost for fill and asphalt. Some decks are only four by eight but even a small deck requires hand rails if it is more than thirty inches off the ground. A larger deck plus stairs and handrails can add over $10,000 to the cost of a new home without adding square footage. Some garages are only 20 x 20 and are not even large enough to fit a full size pick-up. Others may be 22 by 24 but both are considered a double car garage.
 
We all know landscaping in Alaska is expensive. Some new home communities are required in their MOA approval to top soil and hydro seed the entire lot. Others have specific requirements such as the type and height of trees and shrubs. Obviously, landscaping installed by the builder adds to the quoted square footage cost of the home. Leaving it up to the first homeowner to install reduces the cost per square footage but adds to the buyer’s out of pocket expense after the sale. Requirements for lap siding on all four sides rather than just the front of the dwelling also increases the quoted cost per square foot.
 
Two-story elements, whether in the foyer or great room, add to the cost of the home without adding to the square footage. All that’s missing in a two-story element is a floor. Ceiling height is another hidden cost. Most new homes now have nine foot ceilings in the main living level. However, eight foot ceilings on the second floor and basements are still standard. Increasing the vertical space increases costs. Count the number of windows included in any plan and you can increase or decrease the cost by $300 to $500 per window depending on its size.  
 
Then, despite all these differences in the lot and structure, builders also have different strategies when it comes to quoting a square footage price. Allowances for appliances, lighting, cabinets, flooring, et cetera may be lower to initially attract buyers but by the time all the selections are made the price per square foot may be as higher or higher than the competitor.     
                
So when you’re at open house today or next weekend’s Spring Preview, take time out to consider all the variables when it comes to judges the true value of a home. You might be surprised at what you discover.