How Much More Does a 4 Bedroom Home Sell for Than a 3 Bedroom Home?
Licensed since 2003, one of the trends I’ve noticed is that bigger homes are not as desirable as they were twenty years ago. Large homes still have a market, don’t get me wrong, but household size is down overall. The average household had 3.68 people in the home in 1940. In 2010 that number was 2.58. Then came the rise of multi-generational living and grown-up kids still living in their parent’s home. This caused a slight increase from 2.58 to 2.65 in 2017. According to an NBC news report had slightly higher numbers, the average household size still came down to around 3, a steady decline from 3.7 in the 1960’s in the reports they referenced. However you look at it, over the last couple decades, average household size is down and from a boots-on-the-ground industry perspective, I can feel the shrinking buyer pool for larger homes, a the rising buyer pool for smaller homes.
My assumptions before starting the research for this report is that the jump in price from a 2 bedroom home to a 3 bedroom home is massive, and the jump in price from a 3 bedroom home to a 4 bedroom is much less. I’d suggest that all other things being equal, there would be almost no price increase in jumping from a 4 to a 5 bedroom, or a 5 to a 6.
Bedroom Count Home Value Research Criteria
We’re looking at detached homes sold in Portland city proper from Jan. 1st 2023 to April 30th, 2023 or the first third of the year. In that timeframe, 1,959 detached homes sold in Portland, Oregon. Of those, 301 had two bedrooms. 890 were sold with three bedrooms. 531 were sold with 4 bedrooms. 176 with five bedrooms, and 40 total with six or more bedrooms.
|Portland Sold Detached Homes 1/1/23 – 4/30/23||Count||Percentage of Total||Median Sold Price||Increase in Price||Price Per Sq. Ft.||Average Sq. Ft.||Increase in Sq. Ft.|
Notice the price per sq. ft. column. Similar to our recent research article, generally speaking, the bigger the home, the less it sells for per square foot. Now take a look at the median sold price column, there does seem to be a pretty significant jump in home values. The big question here is, is the price jump primarily due to the increase in sq. ft. (last column) or the number of bedrooms?
Pound for Pound Home Value Comparisons Between 3, 4, and 5 Bedrooms
There are many reasons for a home’s value to be higher than others. Specific locations, lot sizes, amenities, remodeling, sq. ft. size, the list goes on. So to try to get an answer on bedroom count value, we need to eliminate the extremes and compare within some additional set parameters.
- Lot size – 3K to 10K
- House size 1800 sq. ft. to 2500 sq. ft.
- Detached Single Family Sold 01/01/23 – 04/30/23
- 3, 4, or 5 bedrooms
The total count for the above is 415.
|Count||Median Sold Price||Price per sq. ft.||Average Sq. Ft.|
Now things are really getting interesting. If you have a home sized between 1800 and 2500 sq. ft. and you’re comparing a three bedroom home against a four bedroom home – they are going to sell for basically the exact same amount. There is no advantage to having four bedrooms over three.
Here’s my answer to the question in the title of this article, how much more does a 4 bedroom home sell for than a 3 bedroom home?
Notice that 5 bedroom homes in that sq. ft. range sold for $49,000 less on average. The lesson from this statistic is simple, don’t cram too many bedrooms into a home. Five bedrooms and above will perform much better in 3,000+ sq. ft. homes.
Household Size Trends has a Major Impact on Home Values
It is pretty amazing to me that the difference between a three bedroom and four bedroom home is about nil, when looking at a comparable size range. Honestly I would have given it a little more of a bump in my head, but I think that is only due to four bedroom homes often ranging above 2500 sq. ft., and not the actual importance to a home buyer of having that fourth bedroom. Home buyers will pay more for bigger homes (though it scales down in price per sq. ft. the bigger the home gets), but it doesn’t look like they will really pay any more for a four bedroom than a three bedroom, all other things being relatively equal.
Now it is important to realize that a lot of those homes advertised as three bedroom properties likely also had a loft space, or a bonus space, or some other space that might serve as an office, hobby room, or misc. room. Having space (sq. ft.) is still a big deal. Having that fourth bedroom in particular? Not so much.
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My small team is over 2,000 home sales in the greater Portland metro area. I love selling homes and I am fascinated by what makes them sell for more or less. I’m a lifelong student of the real estate market and if you’re thinking of selling a home in the next twelve months, I’d love to schedule a time to tour your home. I can help you prepare for the market, forecast out what is coming. See our home selling services here. We charge less than average and provide more marketing and services, so our client’s homes sell faster and for more. Call my office at 503-714-1111 or chat with the bot on this site. I’d love to connect!May 22, 2023