The "Price Per Square Foot" Myth
Beware of the "price per square foot" myth - the construction and real estate industry throw this term around a lot, but you have to really understand what it means before you get your heart set on something.
What does "price per square foot" actually mean?
The term "price per square foot" means that you take the cost of a house and divide it by the total square feet in the house. Typically, people use the number of square feet that are actual heated space in the house.
For example, let's say you look at a house that has 2,000 square feet of heated space. If the price of that house is $200,000, then the "price per square foot" is $100 (i.e., $200,000/2,000=$100).
It might be easy, then, to assume that you can pick any house plan that's 2,000 square feet and have that same builder construct a house in that same neighborhood for that same price. But that can be very, very wrong.
The whole house has to be built – not just the heated space
Areas like covered porches/patios, garages, unfinished attic or basement space, and other "unheated" spaces will drive the overall cost of the house up even if you keep the heated square feet at 2,000.
The builder will still have to put the foundation, the walls, the roof, and perhaps the insulation in those unheated spaces. So if your 2,000 square foot house has a bunch of areas on the plan that say "unfinished" or if the second floor of the plan is a lot smaller than the first floor, then your "price per square foot" is going to be higher.
Watch out for ceiling heights and room configurations
Another thing to beware of with this little term is the definition of "heated space". If any of the rooms in the house are taller than a one-story room (e.g., two story great room or big vaulted ceiling), then that square footage can throw off the equation as well.
The bottom line
Be careful when tossing around "price per square foot" numbers. Make sure that you know what you're talking about before you start budgeting for your home.
When comparing homes or getting estimates, ask your builder to break down the costs more specifically rather than relying solely on this oversimplified metric. The true cost of your dream home depends on much more than just the heated square footage.