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| Median price per square foot (P/SF) allows for a better comparison between differently priced homes as well as homes of different sizes. This can be very useful in helping buyers to compare towns and areas. It can also be used to evaluate the prices of properties under consideration. That is, if the P/SF of a property is substantially above average this should be justified by a superior location, architecture, amenities, quality of fixtures, or other advantages. Price per square foot (P/SF) is a measure of price levels. One advantage over other measures is that it is relatively immune to changes in price mix. That is, average or median price will change substantially if the mix of high and low priced properties changes from one month to another. P/SF will not change as much. A disadvantage is that it does not take acreage into account. Therefore transactions where the value of land is much higher (or lower) than average can affect it. Median price per square foot tends to be much more stable and more reflective of typical values than the average which can be strongly affected by a few extraordinary transactions. For example, if a 2,500 sq. ft. home on the water in Fairfield County sells for $3,000,000, the P/SF is $1,200. This could strongly affect the averages in towns where the typical P/SF is more like $250. |
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