With more and more home buyers and sellers participating in the home buying & selling process to a greater degree than ever before, we can’t write enough posts that provide the basic infomation and skills that help them evaluate home prices. The other day I talked about the popularity and pricing of homes in differering age segments.
Today I’m going to talk about “the comps” and median price per square foot of homes of differing styles. For this purpose I’m going to use Bellevue, Kirkland and Redmond vs. Seattle or all of King County. We will be looking at the differences in price per square foot for ramblers, split-entry homes and ramblers with basements, tri-levels and two story homes both with and without basements. I’m using all sales from 1/01/07 to date, to insure enough volume of sales in each category, to have a relevant median price per square foot. I eliminated lots in excess of 13,000 sf so the “extra” land doesn’t skew the data.
The photo above is a tri-level. When you’ve been in the business for many years, you can pretty much know the floor plan of a house without ever needing to go inside. When a house looks like one story from one side and two story from the other, viewing it from left to right while standing only in front of it, that is a tri-level. You will enter on the main level which has the living room, dining room and kitchen. After you are inside the main floor (and not when you immediately enter the front door) you will go up 4 or 5 steps to the bedrooms or down 4 or five steps to the family room that exits to the yard, usually via sliding glass doors. The garage entrance is on the other side of the family room and no portion of the tri-level is underground. That is your basic tri-level and you can tell that without having to go inside.
The home pictured to the left is a split-entry home. For those reading this from outside of the Seattle Area, you may call a “split-entry” a 2-level, a bi-level, a raised rambler or a raised rancher. All are referencing the same style of home called different things in different areas. Basically it is a rambler with a basement, most often but not always a daylight basement. The underground side of the basement is raised high enough for there to be windows.
The front steps take you up to the front door that looks like it is centered in the middle of the structure. Once you walk in the front door you have to go immediately up or down from the foyer to access any of the rooms. It is a rambler with a basement that is not fully underground at any point. A rambler with a daylight basement is basically the same home, but the street side of the basement is fully underground, so you enter at street level onto the main floor.
Now let’s do some stats on the differing home styles. PPSF = Price Per Square Foot.
Rambler/One Story Home – median price $491,500 – median sf 1,470 – median PPSF $334 DOM 26
Rambler w. basement – median price $699,000 – median sf 2,760 – median PPSF – $253 DOM 30
Some people think that the smaller square footage is creating the higher price per square foot. What is really happening is that the main level is valuing at $334 per square foot (same as the rambler) and the basement level is valuing at $172.50 per square foot. For instance the 2,760 sf divided by two, equals 1,380 on the main level times $334 equals $460,920 for the main floor “rambler portion”. The difference, $699,000 minus $460,920 = $238,080 for the basement divided by 1,380 sf equals $172.50 PPSF for the basement. That averages $253 PPSF for the whole house as to finished square foot and does not include the garage or unfinished/not heated basement area. It’s a bit simplified, but hopefully you get the gist of that. Same is true for the split entry.
Split-entry home – median price $510,000 – median sf 2,150 – median PPSF $237 DOM 30
Again, the main level of 1,075 sf of the split-entry is valuing the same as the rambler at $334 or $359,050. $510,000 minus $359,950 = $150,050 divided by 1,075 basement sf = $139.58 for the basement sf and that averages to $237 PPSF for the whole house. In reality above ground square footage values higher than underground square footage, so if the basement is all underground on either the rambler or split entry, the basement square footage would value for less than a “daylight” basement and the fully above ground portion would value for more than the partially above ground portion. So don’t pay the same for a fully underground basement as you would a daylight basement.
Two Story Home – median price $750,000 – median sf 2,760 – median PPSF $271 – DOM 39
Two Story Home w/basement – median price $1,097,000 – median sf 3,920, median PPSF $280 – DOM 59
The two story home with a basement does not get “diluted” in value by the basement because it is basically the top choice of available homes, there are fewer of them and almost half of them have a lake view. The builders will put the most house, 2 story plus a basement, on the priciest lots with views. So there are a lot of factors that create what looks like full value for the basement on these 2 story homes, when in reality it is an external “plus feature” doing that. Only 4.7% of splits and 1 story ramblers have a lake view, 11.4% of 2 story homes without a basement have a lake view and 42.8% of 2 story homes with a basement have a lake view. 31.8% of the big ramblers with basements have a lake view, so adjust for that as well.
The longer days on market has more to do with higher total price of home, than home style.
The tri-level pictured at the top is only valued at $268 per square foot, even though all of the living square footage is above ground. There are fewer of them, but that does not make them more desirable and a higher PPSF, because when you chop up 2,000 sf into three levels, no level seems large enough. When you put the family room on the main floor next to the kitchen it values higher on the main level, than when you put it down on the basement level. If you can see into the family room on the lower level from the kitchen, it values higher than if you can’t.
It’s really common sense when you think about it that way. With more and more people using price per square foot as an indicator of value, I hope this post gives you a little more info to help you to refine your DIY valuation process.
Have a great day!