A term often associated with home building and the real estate industry is “price per square foot.” When purchasing a home, you’ll often hear the real estate agent or realtor say something along the lines of “this home is $175 per square foot.” What exactly does that mean? To calculate the price per square foot, divide the cost of the home by the square footage of the residence. So, a home that sells for $175,000 and is 1,000 square feet has a price per square foot of $175. Although this can be helpful in some instances, it’s wrong to consider the price per square foot when building a custom home.

Why It’s Wrong

There are multiple reasons why the price per square foot is the wrong thing to consider when building a custom home.

Upgrades and Finishes

There’s much more to consider when buying, selling, or building a home than just the square footage. The cost of a home is going to vary depending on what is on the inside of the home.

Home A

  • Carpet throughout with linoleum in bathroom and kitchen
  • Kitchen and bathrooms have stock cabinetry
  • Formica countertops
  • Hallow core doors
  • Dropped flagstone walkway with concrete steps

Home B

  • Hardwood floors throughout including bathrooms and kitchen
  • Granite/Quartz/Marble countertops
  • Custom kitchen and bathroom cabinetry
  • Crown molding
  • Solid wood doors
  • Central air
  • Sprinkler system
  • Security system
Both Home A and Home B are 3 bedrooms and 2 bathrooms and 1,500 square feet. Obviously, they will have different price tags because of the upgrades and finishes in Home B.

Beds and Baths

Another contributing factor is the number of bedrooms and bathrooms. A home that is 4 bed and 2 bath will cost considerably more than a home that is 3 bed and 1 bath even if they are the same square footage. Even though the rooms in the 4 bedroom home will be considerably smaller, that home will come with a larger price tag.


As all home buyers, sellers, and builders know location is everything. Locally speaking, a home in Williamsburg is going to have a considerably different value than a home in Traverse City. Even though the two cities are just a few miles away, the location of the home will impact the cost. It’s not just cities either. Neighborhoods have different costs as well. If you were to buy, sell, or build a home in the Slabtown neighborhood of Traverse City, it would have an extremely different price if that same house was in the Traverse Heights neighborhood. Generally speaking, homes closer to the downtown area will carry a larger price versus homes further away.

Ask the Experts at Silverwood Enterprises

For home building purposes asking what a home will cost per square foot would be like asking a car salesman what the new Ford Fusion costs per pound. First, nobody would ever consider asking, let alone buying a car based on the price per pound. Second, there are upgrades, features, and different models of Fusion’s that make the price vary from car to car. The same can be said about building a home. Each home that we build is different than the last, and therefore the price per square foot in each home will be different. Instead of asking what the price per square foot is to build a home, simply ask us to sit down with you, and we will develop a plan to build the home of your dreams within your budget. Contact us today and see why we’ve been building dreams for over 35 years.

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