But here's how the calculation goes: Let's say the liveable area of a house is 1,000 square feet. The house is priced at $60,000. You divide the price of the home ($60,000) by the number of square feet (1,000) to come up with $60 per square foot.
It's a lousy way to compare homes because:
-->It doesn't consider the size of the lot the house is on.
-->It doesn't consider the desirability of the lot.
-->It only vaguely considers the condition of the house.
-->It only vaguely considers the traffic flow within the house.
-->It only vaguely considers the neighborhood.
-->And so on.
Forget price per square foot.
Hope that helps.
Price per square foot is useful when you are making comparisons between very similar homes, in similar areas with similar features. Think of it as vegetables price per pound. If one store has beefsteak tomatoes at $.99 per pound and another charges $1.50 per pound it's easy to see the deal. If you compare beefsteak tomatoes against roma tomatoes, you may not have the same comparison.
A large luxury home with multiple levels may be cheaper per square foot than a small ranch style home on acreage.