Friday, March 6, 2015
Old vs New Construction
Taking a look again at the North Capitol hill area we have focused on all week, we find that the median home sales price in the 98102 zip code was $737,500 in the last year. This would be for a three-bedroom, 2.25 bath house with 1831 square feet of living space, for a sales price of $402.79/sf.
If we look at older construction, that is homes built before 1978, the median home with 2610 sf sold for $855,000 - or $327.59/sf.
The median new construction house built since 2004 in that same zip code sold for $693,900 for 1600sf of living space - or $433.69/sf.
So while buyers are willing to sacrifice space for newer construction, they are willing to pay a premium of 32% on the price per square foot for new.
And if we apply a 17% discount to the older homes located on a major arterial, like Harvard Avenue East, a house like the Lambert house would sell in today's market for around $813,000.
Pricing decisions are always complex, but this case study provides an example of how to calculate market values between old and new construction.