The price of a square foot of property in San Francisco is a challenge to figure out, even for seasoned real estate buyers or investors. Buyers will often ask about the price per square foot of a house or condo when they first start looking for a home. Months later, after submitting a few (or many) offers, my experience has been that price per square foot falls by the wayside when buyers find their dream home. The number one question on their minds then is how much do I have to pay to get this home and how many offers do you think there will be?
New buyers look at me skeptically as I patiently explain that the “spreadsheet approach” to residential real estate may be time honored in the rest of the country, but San Francisco is different. After a recent open house where several new buyers asked the price-per-square-foot question, I thought I would do a small survey of my clients who purchased a home in San Francisco. Typical of buyers in this city, my clients are highly educated and work in finance, banking, technology, real estate, or law or they are retired. Some have lived in the Bay Area all their lives; others are recent transplants from other states and countries. Whether buying a house, a condo, a pied-à-terre, or an investment property, all of them methodically searched for the property they eventually bought for six months to a year or more.
I asked them the questions below and if they were willing to share any additional words of wisdom.
- Did you consider price per square foot when you first started looking
for a home?
- When you bought your home, was price per square foot a factor?
- What was the most important factor in your choice of dwelling: location, size, number of beds and baths, parking, or something else?
My clients were so generous and their answers so interesting I am breaking this article into two parts. Question 1 is answered here and questions 2 and 3 will be answered next month.
Did you consider price per square foot when you first started looking for a home?
- Yes. The most important factor is that I like the place, so charm is the key element. This is purely subjective, but even if all other objective criteria are good, the key element is: Would my family and I be happy to live in this place? Of course, I like to challenge this emotional statement with objective considerations, including natural light, fog vs. sunshine, noise levels, price, design of the building and exposure to earthquakes, parking, etc. I looked at price per square foot when first looking for a home and it was also a factor for buying the condo.
- No. I’d say we didn’t consider price per square foot. We were more interested in location, number of bedrooms, and the overall feel of the place. Parking was also a deal breaker for us.
- Yes, however in San Francisco price per square foot is a bit of a wild card and difficult to compare. The averages are skewed by so many variables. When looking at property, I always evaluate the price per square foot along with other factors.
- No. We did not find price per square foot of much use because of the multiple factors we were considering: location, view, parking, HOA dues, condition, etc.
- Yes. I would look at the average price per square foot for the neighborhood or area and then expect houses to be around that number. If a house was way over the average, I expected something great to be going on – big lot, unique architectural features for example. If it was a dump and still had an average price per square foot, I would pass right by it. If it was nicely improved but otherwise average and had a higher-than-average price per square foot, I often passed it by, too. I’m rigid like that.
- No. Our priority was location (if it’s walking distance to BART), price, total square feet, and number of bedrooms and bathrooms.
- No. I didn’t initially think of price per square foot when we began our search. I soon realized it was an important factor; however, it was not the driving force in our decision to purchase our unit. Our final decision was based on what unit in which location would be best for our dog — square footage, access to green space, etc.
To me this is a group of typical San Francisco buyers. More to come next month.