Price Per Square Foot -- An Industry Barometer!

One of the ways we in the industry evaluate the relative value and/or pricing of a condominium in Toronto, is to try and figure out " the price per square foot " of the property under consideration.

On a newer property and/or condominium being sold by a Developer this is usually quite easy, as the unit size is almost always indicated -- and the price per sq. foot for the unit is hence just the declared price divided by the units size. ie./ So if a 675 sq. foot unit is selling for $299,900.00 -- its' price per sq. footage price is actually $444.29 (or roughly $445.00). For newer properties such as the one in this example, parking and locker costs are usually added on (after the fact), so an allowance for these factors doesn't normally have to be taken into account.

Of course, the above noted calculation can only be done when and if the Seller declares the properties square footage, which isn't always declared in the case of a resale. When and if it is declared, one ought to subtract the relative value of both the parking and locker, and then divide the remaining stipend (or what's left of the asking price) by the declared square footage. ie./ On an 800 sq. foot unit listed at $399,900.00 -- with a parking spot valued at approximately $25,000.00 and a locker worth roughly $3,500.00 -- the price per sq. foot for said unit would be more like $464.25 and/or roughly $465.00 per sq. foot.

How is this helpful and/or beneficial to a potential Buyer? First off -- given that this is the language and/or general guideline used by Developers to assess the value of what they're selling -- knowing this figure and/or information at the very least puts you on an even playing field with the Seller when it comes to determining and/or considering the relative value of what is being sold and/or purchased? Moreover, the more you know about the relative value and/or price per sq. foot of properties throughout Toronto, the more you can start to get a handle on any premiums being charged for things such as location(s) / finishes / up-grades and the like. Where and if large discrepancies appear, knowing the price per square foot of the properties in question, should also enhance your' capacity to understand where this discrepancy is coming from.

Finally -- as should go without saying, the only figures (in terms of square footage) which ought to be taken into consideration when making such calculations is the interior " living area " -- as this is the only square footage which actually counts in determining the real value of a property (ie./ outdoor and/or terrace space does of course have an impact -- but as it isn't living space per se, it's value is more as an up-grade and/or feature benefit than as actual living space etc...).

Hence -- next time your' out there, try to ascertain how much the property you're considering is actually selling for on a price per square footage basis, and then make comparisons (where-ever possible) based upon these kinds of calculations. Not that this figure is and/or ought to be the be all and end all -- of your' valuations and/or judgements, but outside of most of the extraneous things one can look at, price per square footage figures at least have the benefit of being a somewhat objective place to start. If the numbers suggest anything irregular and/or out of the norm (which they often do) -- the next step is always trying to account for that discrepancy and/or figuring out where it's coming from. Without this kind of initial guideline and/or barometer -- trying to assess the real relative value of any property you're likely to consider is something akin to licking your' fingers and sticking them up in the wind to try and gage what the weather might do next. If you'd rather keep your' fingers dry and rely upon more tangible guidelines and/or instruments -- the price per sq. footage barometer (carried by most Realtors and Developers) may well be the instrument for you.