Among the "Affordable" sector; as the squarefootage goes down, the dollars per square foot increases. That is the formula.
The way to increase the $$/sqft is by upgrading the house.
For this reason, you will see two 1500 sqft houses; one with $79/sqft and one with $120/sqft.
And, for this reason, you cannot rely solely on that statistic when determining the Value of a house.
Also, 2 identical houses, identical size, will have different $$/sqft depending upon their LOCATION.
The CMA that your Realtor does will take everthing into consideration for the true VALUE.