When shopping for home builders and general contractors, it is important to compare “apples to apples” and not “apples to oranges” with regard to basic price per square foot numbers. Sometimes it is easy to misinterpret – or misrepresent – the meaning of numbers and how they are used to describe the price of building a new home. It is important for homeowners to understand the value and type of home that a listed price actually represents during the design and exploration process.
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With regards to pricing a new construction project, the difference between air-conditioned square footage and under roof
square footage can have an impact on the overall cost of the project. There is a great difference in price between “air conditioned” square footage and “under roof” square footage.” Air conditioned space includes all of the space that is sealed, insulated, and receives heating and cooling. Under-roof footage includes every square foot that is covered by the roof including all porches and garage spaces.
It is possible for the different price averages between air-conditioned square footage and under roof square footage to be used to manipulate and mislead a customer.
Here is a case study from one of our recent homes here at Southern Oak Custom Homes:
Total price of completed home: $736,000
This was a nice home with high-end finishing with lots of extra add-on features.
Completed Sales Price: | Cost: $736,000 | |
Under Roof Footage | 4,000sqft | Avg: $184/sqft |
Air-Conditioned Footage | 2,550sqft | Avg: $288/sqft |
While it seems simple to say, but “the cost of a home is the cost of a home” that price can be misrepresented quite easily. For instance, a person could accurately say, “We built that home for $184/sqft.” and not be wrong.
… Then, a different customer could maybe ask for a home with the same air conditioned
footage without a garage or covered porches and not be able to build the house for $184/sqft. Conditioned and non-conditioned square footage work in balance together. Most homes typically land between 70-80% of the total underroof footage to be air conditioned. As the footage of non-air conditioned space grows in relation to the conditioned space, the price per square foot can "appear" to dramatically change.
A home with lots of unconditioned space under roof will have a more expensive price per conditioned footage no matter the total cost of the home. Consider the numbers from the home above and lets play with the type of square footage and see how the numbers change.
Conditioned Footage | Non-HVAC Footage | Conditioned Price Per Foot | Non-HVAC Price Per Foot | Total Price |
1,000 sqft (25%) | 3,000 sqft | $736/sqft | $184/sqft | $736,000 |
1,500 sqft (37%) | 2,500 sqft | $490/sqft | $184/sqft | $736,000 |
2,000 sqft (50%) | 2,000 sqft | $368/sqft | $184/sqft | $736,000 |
2,500 sqft (62%) | 1,500 sqft | $294/sqft | $184/sqft | $736,000 |
3,000 sqft (75%) | 1,000 sqft | $245/sqft | $184/sqft | $736,000 |
3,500 sqft (87%) | 500 sqft | $210/sqft | $184/sqft | $736,000 |
4,000 sqft (100%) | 0 sqft | $184/sqft | $184/sqft | $736,000 |
Now, while this table is a little silly – and we acknowledge there are many many different
variables that go into the cost of a home – the table is designed to illustrate that if a budget and total cost of a home is stable, how that money is spent can shift. Some builders try to hide the total cost of a home behind as small of a "price per foot" number as possible. The key for homeowners is to not be fooled by any one variable, but rather keep the big picture in mind.
The key for homeowners is to not be fooled by any one variable, but rather keep the big picture in mind.
When looking at very broad price metrics like “price per square foot” it is a
disservice to yourself and the builder to take the number at face value. Maybe the house is small and the homeowner chose the most expensive finishings at every opportunity? Maybe the house is as large as possible and the homeowner chose the cheapest finishings?
In conclusion, “price per square foot” is a very broad metric that can be twisted and turned like a vague statistic used to push a certain narrative. Be careful looking at these numbers and drawing any solid conclusions. The final quality of a new home is far more important than a billboard metric. Ask more questions of yourself and of your builder before you commit your project to someone.
