Wednesday, April 5, 2023 / by Amy Brown
In order to build a new home here with AVERAGE features and fixtures (low to mid grade flooring such as carpet, small lot, lower cost granite, fiberglass shower inserts, etc.) the price is approximately $400/sf. For a luxury home on a larger lot with hardwood floors and higher level features that price increases to $500-600/sf.
In order to determine whether a resale property is priced at a reasonable or below market price, you have your agent analyze the price per square foot as compared to under contract and closed homes within the last six months of similar age and in the same location to the property that you are considering.
You can also use the new construction price per square foot to determine whether a resale or new construction home is the right path for you.
For example, we are going to use two properties on Sunset Mountain, a community in N. Asheville above the Grove Park Inn. This is an older, established neighborhood with most homes being built in the 1960s.
Our closed property stats:
This home is a one level with a basement brick rancher, constructed in 1962, 4 bedrooms, 3.5 baths, 3603 sf. It sold on 3/10/23 for $1,115,500 at a price of $309/sf. This home went under contract in 9 days.
Our active property stats:
Also on Sunset Mountain, this is a one level home with a basement, built in 1965, 4 bedrooms, 3 baths, 3817 sf. This house is listed for $1,450,000 at a price of $379/sf. This home has been on the market for 264 days.
Both homes are very similar in condition and aesthetic and are located less than 1/2 mile from one another in one of the most desirable areas of Asheville. So why would the second one be on the market so long?
Simple math! That $70/sf has made all of the difference in the world. One home was priced at or slightly below market value, thus creating a competitive price point for the buyer, the second home is over priced for the market and remains up for sale. A longer cumulative days on market can also indicate a seller that is unwilling to negotiate and might best be a situation to walk away from.
The average ROI annually for this area is between 10-18% so the buyers for the closed home by this time next year with have accumulated $30-55/sf in equity.
Know your stats, work the numbers, make a smart investment!