Per-Square-Foot Pricing Brings Down Home Building Quality
Pricing Houses by the Square Foot Is Like Selling Cars by the Pound
By Peter L. Pfieffer, FAIA
Over the past few years, my business partner, Alan Barley, AIA, and I have noticed a troubling shift in how homes are perceived by the public, and this shift has negatively affected the quality of U.S. homes. Let’s face it, lots of us are very adept at quantifying things, and we’re great at crunching numbers, but we’ve gone too far with this approach when valuing homes. Albert Einstein had it right when he said, “Not everything that can be counted counts, and not everything that counts can be counted.”
Let’s look at an example: When you buy a Ford Taurus, you know what you’re buying. The car is built to comply with Department of Transportation safety and performance standards. You can upgrade to leather seats, but it’s still just a Taurus. However, when you buy a Mercedes, you have a different set of expectations about the car’s quality: really nice leather seats, better craftsmanship, superior performance, improved safety and durability, and overall quality “under the skin”—the things you can’t see but you know are built into the car. You can even move from dealer to dealer to get better pricing, knowing you’re getting the exact same product. And that’s where the problem comes in. People think they can treat buying a house like buying a car. We’ve mixed up the adjectives quantity and quality by relying too heavily on the all-too-ubiquitous price-per-square-foot yardstick for evaluating homes. This is especially true for high-end custom homes. You can get the trophy kitchen, the Palladian windows, the multiple crown moldings, and the profusion of meaningless steeply-pitched roof angles, but often these “high-end” homes have “behind-the-scenes” components—like plumbing, HVAC, waterproofing methods, structural components, windows, and siding—that are no better than those used in much more affordable homes just across the tracks. And, they can be expected to last about as long, before the occupants experience expensive maintenance problems, or, worse, unhealthy conditions—like water leaks and mold.
Where Did Per-Square-Foot Pricing Come From?
The price-per-square-foot yardstick is relatively new; it started in the early ’80s. Before then, appraisers were more creative with their assessments. Attributes like floor plan, flow, a house’s responsiveness to its setting, care of craftsmanship, and even livability were the metrics used to determine value. Per-square-foot pricing has its roots in the production home building business, where there is little difference in the various home-made choices. Most three-bedroom, two-and-a-half bath homes have approximately the same size two-car garage, an attention-grabbing front entry, and a modest back patio. Except for shape, rooflines, and interior appointments, there isn’t much variation. But this is not so for truly custom, site-specific homes on a particular piece of property with unique views, topography, trees, etc. For example, it’s typical for a custom home designed for Texas hill country to have half-again as much space for outdoor areas (screened porches, decks, cabanas, and patios} as for interior living “conditioned” areas. Value-added areas like these affect the overall price to build the home, but they don’t add to the sale price if it is calcu lated using just the square footage of the conditioned space. This distinction will be increasingly crucial as more green homes are built. They cost more to build, yet they have higher intrinsic value and cost less to operate. It would be a crime to compare thorn on a square-foot basis with the non-green homes down the street.
Another frightening development: the super-sizing of the new American home. That phenomenon owes its existence, at least partially, to the price-per-square-foot yardstick. Homes have become bigger for two reasons: it’s easier to get the price-per-square-foot lower if the house is bigger, and we tend to overestimate our needs. When our architectural firm sets out to design and build a fine home, we investigate more than the obvious, and we include attributes like cohesiveness of design, human scale, comfort, climatic-responsiveness, and regionally appropriate design. Fine designs that “live well” require a lot more than drama and street appeal to carry the day. The design process recipe includes ample amounts of comprehensive thinking, a fair bit of soul searching, plenty of time for critical evaluation, and a great deal of well-honed talent. This recipe, too, can’t be adequately negotiated on a price-per-square-foot basis.
When negotiating a fee with your client, or the cost-per- square-foot with the client and the contractor, be sure the clients understand that there are other, more relevant ways to measure a house’s value. If they just go by the price-per-square-foot model and take the lowest price, then they may well end up getting just what they asked for: the lowest-priced components and corresponding low-quality construction. And remember, a client can sell a Taurus that they are unhappy with much more easily than they can sell a house that doesn’t meet their expectations.
Peter L. Pfeiffer, FAIA, is one of the most widely regarded green architects in the United Stales. His firm, based in Austin, Texas, is BARLEY PFEIFFER ARCHITECTS, Barleypfeiffer.com.