Price Per Square Foot: What Does it Even Mean?
When it comes to your custom home budget, almost everyone in the industry prices by square foot. For example, many builders will tell you they build for $200–$300 per square foot (side note: never believe someone who tells you they do it for under $100 per square foot). In fact, we here at Springhouse even use this pricing system for estimates. However, it’s not a standard of measurement. Simply put, there’s so many variables that play into this way of pricing, and everyone uses it differently (we’ll get back to this later).
But before we move forward, how does square foot pricing even work?
Good question! The square foot price is an average of the total cost to build the house, divided by the number of square feet in the house. But like we mentioned earlier, there are a lot of variables that need to be defined. Let’s take a closer look...
Not Every Square Foot is the Same
First things first, remember to ask questions when someone gives you a price per square foot number. This doesn’t need to be combative, by any means—you’re just trying to figure out what their definition of square footage means. You’re not questioning their number, but you want to find out what their number is.
Here’s what we mean by that: Square footage is an average of every square foot in the house, all the way from the basement through the roof. Not only do you need to know how many floors you have, you also need to consider the design of the home. Why? Because not every square foot is calculated the same as the other...
For example, one square foot you take in the living room might include joist, subfloor, hardwood floor, air, drywall ceiling and roofline attic space. That’s a lot different square footage than in the master bathroom where you have joist, subfloor, high-end tile, cabinets, plumbing fixtures, sink, mirror, specialty light fixtures, etc.
As you can see, the price per square foot depends on where it’s located in your home.
Square footage also depends on what you're averaging, because different people calculate square footage numbers differently. For example, at Springhouse, we calculate square footage from the outside of the wall (because the wall is not free!). That being said, we don’t include garages, porches or patios, even if they're covered. However, we do include a basic finished basement space.
The bottom line? The definition of square footage is going to skew the calculation, because it’s simply an average.
Square Footage Pricing Depends on the Design of the Home
Let’s take another example. A 2,000 square foot ranch house on a slab is going to be a major price difference than a ranch house with a half-finished basement. A half-finished basement is much less expensive to finish, because you probably won’t have a full kitchen or master bathroom down there, which are the most expensive square feet to account for. All of these factors average together, making the ranch with a partially finished basement a lot less expensive, square-footage-wise, than the ranch on a slab.
Not to mention, the smaller the house, the higher the square footage price. Confusing, right? Well, you still have the kitchen and master bath, which are the two most expensive rooms—you're just compressing all of the open-air square footage. Although this means a higher square-footage price, that doesn’t necessarily mean a higher construction price, of course.
Some builders calculate square footage as everything under the roof, including outdoor patios, garage space, and all of the basement space (finished or unfinished). This is not wrong! They're just calculating it a different way than someone else. This is exactly why you need to ask how they’re calculating price per square foot.
Side Note: If you're comparing building price per square foot with the square footage price of an existing home on the market, keep in mind that this is a really disproportionate number. For one, realtors don’t calculate any basement square footage, so you're not getting that average. More importantly, remember that the existing house is going to include all of the amenities and the land—basically everything you're buying is included. They're simply taking the selling number divided by the square feet. This is much different than dividing construction costs by square footage.
Beware of Low Square Footage Cost
Remember what we said about not trusting someone quoting you less than $100 per square foot? The reason they’re able to quote this low number is because they're probably counting every square foot, including porches, garages, and an unfinished basement. They’re also counting on using something like sheet vinyl, or the cheapest cabinets you can get. It’s very important to be concerned about construction quality and the longevity of the building—so, be careful of those really low numbers.
Lastly, if you're over budget, and you're considering reducing the square footage price, remember that every square foot is not the same. If you ask to take out two feet of the master bedroom, living room and dining room, that's not a lot of money saved. On the other hand, it’ll be a much different calculation if you're taking two feet out of the master bath, the kitchen and the covered porch with the pavers, wood ceiling and other high-ticket items.
All and all, square footage pricing isn’t a bad thing! You just need to know how it’s calculated.
Have any questions?
Although we covered a lot in this post, you may still have some other questions about calculating price per square foot. Whether you’re involved in the custom home process now, or even just considering it, join our free Facebook group—we’ll help you answer any questions you might have! Also, feel free to invite anyone that you think would benefit from this collaborative. You’ll not only get advice from me, but from other people who have been through this, too.
Start the process.
When it comes to designing and building a custom home, nothing beats having a trusted, experienced team of architects on your side. Let’s set up a call to meet, discuss your goals, answer your questions, and settle your fears. We can’t wait to meet you!