After catching up on the market situation last week, we got to thinking about real estate statistics and how Realtors use and mis-use them. This week on Escrow Out Loud, our San Francisco Real Estate podcast, we were inspired to chat about one of the most popular real estate statistics in San Francisco: price per square foot.
[00:21] Price per square foot (PPSF or $/SF) is a useful metric for pricing consideration and analysis. But where does the number come from? In San Francisco, MLS listings often contain a square footage measurement that allows us to calculate price per square foot. However, MLS sources for square footage come from a variety of sources, and there are no “square footage police” who verify, regulate, or monitor the reporting of square footage.
Finally, we talk about some property types where price per square foot may be a more useful or accurate measurement than in other areas. In a nutshell, price per square foot is most useful where there is homogenous housing.
[05:38] Another challenge in measuring square footage in existing as-built neighborhoods is the ‘bonus space’ a.k.a “This room was probably built without a permit space”. Given that bonus rooms are typically built without benefit of permits, appraisers don’t value these spaces at the same value (price per square foot) as warranted space within a home.
[07:41] When it comes to information on square footage, it is not only the different sources but also the different methods used to measure the footage that result in inconsistencies. Interior only? Walls? Stairs? Bonus space?
[10:36] Finally, a sales price consists of both market value and personal value. In any given sale, how do we know if the sales price is reflective of actual value or if the price was influenced by a personal factor?
Price per square foot is a great place to start a conversation or exploration of value, but because of the way numbers are measured and reported in San Francisco, it isn’t necessarily a 100% accurate data point.
Thank you for joining us for this week’s episode. We hope you enjoyed tuning in and join us again next week!