The Bigger the Home, the Less it Sells for Per Square Foot.
After selling homes in Portland, Oregon for twenty years, I’ve picked up on a lot of consistent patterns that helps me to price homes correctly and give my clients the best possible real estate advice. Whether it is the best time to sell or buy a home, knowing the factors that causes a home to sell for more or less, or the reasons why a home sells or doesn’t, I’ve enjoyed the process of learning and researching over the years.
I can tell my clients exactly how much value is added to a home if they add an ADU, solar panels, or a swimming pool (all based on local statistics). Through my local research I can let them know how much faster and for more single-level homes sell for than any other type. I can explain how much more homes sell for that have attached bathrooms (owners suite bedrooms) that ones that do not. I can help my clients understand the nuances of home values. After this article I can point to local research that I’ve conducted to explain a real estate rule of thumb, the bigger the home, the less it sells for per sq. ft.
Price Per Square Foot Changes with Home Size
To create this data, I’ve used numbers from RMLS, our local MLS system that covers Portland and beyond. In the last three months (back from 01/20/2023), 1,471 detached homes have sold in Portland city proper. Of those 1,471 homes, 120 had less than 1,000 sq. ft. 598 were 1,001 to 2,000 sq. ft. in size. 535 were 2,0001 to 3,000 sq. ft. in size. 167 were 3,001 to 4,000 sq. ft. in size, and 51 were 4,001 sq. ft. and bigger. Let’s check out the results:
Here are the home size vs. price per sq. ft. results in a table format:
|Sold Detached Homes Last 3 Months in Portland, Oregon (1,471)||Price Per Sq. Ft.|
|Under 1,000 sq. ft. (120)||$420|
|1,001 to 2,000 sq. ft. (598)||$313|
|2,001 to 3,000 sq. ft. (535)||$273|
|3,001 to 4,000 sq. ft. (167)||$276|
|4,001 sq. ft. + (51)||$298|
Explaining the Difference in Price Per Sq. Ft. vs. Home Size
First, it is important to notice that no size of home sold for more per sq. ft. than the smallest homes on the market. This is true in part because those small homes represent the entry level pricing, the floor pricing, simply to obtain a home for yourself in Portland, Oregon. This is also true in part because a home itself has a certain value and expanding a home in size doesn’t equally expand the value of owning a home. There is a value to home ownership that goes beyond its price per pound. There is simply a certain low pricing ceiling required to purchase a home in a certain city (based on average wages and inventory levels).
This is also going to be similarly true of the next segment, the 1,001 to 2,001 sq. ft. homes. They may have two or three bedrooms, but generally a smaller sized home is purchased by first time home buyers (and downsizers too, but in a lesser volume).
After losing that sort of necessary floor price to purchase a small or starter home, we notice an immediate drop in price per sq. ft. from 2,000 that continues up to 4,000 sq. ft., representing a huge portion of available housing. Here homebuyers can be pickier. The home is often not their first, and they are looking for the best fit when upgrading to their next home.
The 4,001 + sq. ft. size of home enters the luxury category in real estate. Here it is the expensive finishes and materials that are added to a property that drive up the price per sq. ft. Notice though, that even luxury homes do not sell for as much per square foot as the smallest starter homes. It is common here to find luxury homes in unique locations, on the riverfront, downtown, with incredible views, next to choice parks or schools, location amenities that drive up the price.
Buy or Sell with an Experienced Realtor
When making an offer on a home or pricing your own property to sell, there are a myriad of contributing factors in determining price. Contact our top 1% buyers agents or top 1% sellers agents today. Chat with the bot on this site, or give us a call at 503-714-1111. We’d love to connect!January 30, 2023