Market statistics and sales prices per square foot by ZIP code - useful?

By
Real Estate Broker/Owner with Robin Rogers, Silverbridge Realty, San Antonio, Texas

Revisiting this post from 2008, I had an e-mail from some clients overseas asking about the average price per square foot in ZIP code 78249 to help them decide whether to make an offer on a second home and for how much. They saw the Board of Realtor statistics published from December and were wondering if the average price per square foot would fall to $75 to $78 in this neighborhood. Here's the gist of my reply, recycled for the blog in case it's interesting to others:

The problem with ZIP codes is they are funny shapes and 78249 goes all over the place-I know because I used to live in it and I still have a rental property in it! The two are wildly different. The average price per SF is not a meaningful number, because the ZIP code contains a variety of homes. San Antonio is now the eighth-largest US city, so we are talking about a lot of homes, too.

According to the local Board of Realtors, sales prices are projected to stay level and even rise into the spring and most of the new-home inventory is expected to be sold by the end of the year. Because San Antonio has reasonably priced real estate that has not shot up in value, it is not expected to go down much either. There was a slowdown last fall, in the lower price ranges especially, because of the subprime mortgage industry trouble, but homes in good condition and well priced continued to sell. There is a six-month inventory (last time I checked anyway), which is skewed towards a buyer's market, but nothing like Las Vegas, Miami, San Diego, or Tampa.

When I do a search on the MLS of single-family homes that have sold to date since September 1 in 78249, I get the following results: the lowest priced were 10 homes under $100,000. Two homes sold for over $1.2 and $1 million respectively; followed by three over $500,000 and three in the mid- to high-$400,000s. Of the rest, 44 sold for $200,000 to $300,000; 110 sold for $150,000 to $200,000; and 91 sold for $100,000 to $150,000.

With these figures the average sold price for all of 78249 was $178,057; the median was $159,853; and the average sold price per square foot was $85.

However, the sales price per square foot also varies a lot with the size of the home. There is a certain "base" price per square foot that it takes to build any house. Then as you increase the size, you reach efficiencies of scale. On top of that, of course, you add the features and finish-out: a mansion will obviously cost more per square foot because of the marble floors and gold faucets than a regular tract home. But different-sized tract homes in the same subdivision, by the same builder, even with the same degree of finish-out, will have a different price per square foot. You'd have to know exactly how many homes sold and for what size, and what features they had, for the average price per square foot to be useful in a large area such as a ZIP code.

This concludes the broadcast portion of my message to my clients.

Admiring the daffodilsNow I'm a big-picture person myself, and I love to look for trends and patterns, but sometimes you have to zoom in a bit to see the trees in the forest.

Or in this case, zooming in even further to see the daffodils among the trees! This was taken in 2004, and the squirrels have probably eaten all the tasty flowers by now. But if we get some nice new tenants who want to plant some more, I'll buy the bulbs!

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Robin Rogers, Realtor, Broker-owner, ABR, TRC, CRS

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78240
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Rainmaker
960,403
Georgie Hunter
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info
I never like to put too much stock in price per square foot either, as far as stats go.  If the house feels right, what does that have to do with it really?  Some people are just all about the statistics!
Feb 03, 2008 03:59 AM #1
Rainmaker
255,331
Robin Rogers
Robin Rogers, Silverbridge Realty, San Antonio, Texas - San Antonio, TX
ABR, CRS - Real Estate Broker & Investment Adviser

Aloha, Georgina:

Yes, these clients are looking for a great investment, not to say a bargain, and are perusing all the real-estate websites that say that prices will fall even farther. They live overseas and their sons would be staying in the house while going to college, so there's not much "feeling" involved other than their not wanting to overpay for a home.

Cheers,

Robin

Feb 03, 2008 09:15 AM #2
Rainer
104,699
Don Stern
Realty Executives South Louisiana - Baton Rouge, LA
Greater Baton Rouge Real Estate
Robin, I agree that average or median price or price/sq.ft. for an entire market area is, at best, only one indicator of the market.  I'm a numbers kind of guy, however, and have found extremely useful information by breaking market data down further looking at price vs. price/sq.ft. vs. living area, etc. by market area, zip code, and even neighborhood if the number of data are sufficient to produce meaningful results. This type of in-depth analysis is time consuming.  Judging by the banks, appraisers, developers, and builders willing to pay for this type of analysis, I'm not alone in my assessment of it's value.
Feb 03, 2008 09:55 AM #3
Rainmaker
255,331
Robin Rogers
Robin Rogers, Silverbridge Realty, San Antonio, Texas - San Antonio, TX
ABR, CRS - Real Estate Broker & Investment Adviser

Hi, Don:

I do a lot of analysis of comps and market data for my clients who want to rehab or invest in rental properties. It is very time-consuming! I think you have to get down to the neighborhood level, and in many neighborhoods where the homes have been rehabbed or flipped up, you have to do even more analysis of individual homes. Tract homes sure are a lot easier to deal with.

The point I was trying to make in my post is that ZIP codes are not homogeneous, and they're too big to take an average price for them and extrapolate that to the market. Plus, price per square foot is also not that revealing unless you take into account many other factors, as you say.

Thanks for your comment. I wish I could sell my analyses to appraisers, developers, banks, etc.!

Cheers,

Robin

Feb 03, 2008 10:17 AM #4
Anonymous
Anonymous
Danita Allen

Thanks!

Feb 08, 2008 07:09 PM #5
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Rainmaker
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Robin Rogers

ABR, CRS - Real Estate Broker & Investment Adviser
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