Price per sq foot is just one of many factors that should be considered when buying a home. In Provincetown over the past 12 months for example the average price per sq ft of the 176 properties that sold was $547. If you look at it by property type condos were $569/sq ft, single family homes $513/sq ft and multi-family homes $439/sq ft. Just one more example, if you look at condos by sale price you get this -
$0 - $250K $461/sq ft
$250K - $500K $604/sq ft
$500K - $750K $532/sq ft
$750K - $1M $715/sq ft
Over $1M $469/sq ft
Quite the range of costs per sq ft. If you start looking at waterfront vs non-waterfront, or more desirable areas of town you will get vast differences.
So the short answer, price per sq ft can be helpful in comparing properties but you need to make sure you are comparing apples to apples. Your best bet is to ask your realtor to find you comparable properties to one you may be interested in and compare actual sales price. If the properties are of similar size then you can make the comparison more accurately.
Hope this helps.
You can run reports to find info discussed above on the reports tab of my website