Price Per Square Foot: A Useful San Francisco Metric?

Ah, price per square foot. Is it a valid metric when pricing real estate? But more importantly (to me, at least), is a the more narrow question of it is a valid metric when pricing San Francisco real estate? This is a topic that inspires heated discussion, debate, and feelings, so let’s keep it friendly and respectful in the comments. Below is my opinion on price per square foot in San Francisco, based on my experience as a realtor in San Francisco over the past 9 years. I’ll start with where I think it can be a useful yardstick.

Price per square foot can be a useful metric when you are comparing apples to apples. For example, within a particular condominium building or project – One Hawthorne, One Rincon, The Infinity, or Millennium Tower, for example. If you have a basically interchangeable housing style, lofts in a box built around 2000 in San Francisco in district 9 for example, then price per square foot can again be a useful metric. But the amount of “apples to apples” housing stock in San Francisco is fairly limited and most of it is centered around district 9 neighborhoods like South Beach, Yerba Buena, or South of Market.

Price per square foot, as a general rule, is not a good metric for San Francisco real estate because our homes are so individual and distinct. Every home is unique, and given that many of our neighborhoods have diverse and widely varying housing stock, price per square foot becomes a poor measure when comparing house A to house B in Noe Valley. In addition to basic features like layout, room count, architectural style and property condition, price per square foot fails to take into account many intangibles like how light and airy a home feels, or if it is considered a good block or a heavily trafficked block that is less desirable.

I bring all of this up because in the coming days I’m going to be publishing an incredible amount of charts and statistics about San Franicsco real estate performance in 2010 compared to 2009. One of the metrics I have charted for San Francisco neighborhoods is price per square foot. Not because it is an excellent metric to calculate what the value of a particular home is, but because it is an often asked for metric, and it can help in validating high level trends about pricing direction. But before I present all the data, I just wanted to raise my concerns and feelings about price per square foot.

2010 vs. 2009 Reports:

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