Is the cost per square foot estimate for renovations a myth?
We know you can't help it. When considering a renovation, what's the first thing you do? Google something like "How much does it cost to renovate my ________? "
I'm sure you've done it. We've done it (mainly just out of morbid curiosity; more on that below).
That search yielded the following answer: A typical kitchen renovation typically costs $ or a certain $ per square foot. Cost per square foot (cpsf) is found by dividing the value of the home by the square footage of the home (if a $300K home is 2000 sq/ft, it “costs” $150 sq/ft). People typically go on a website like Zillow, calculate the value of their home in cpsf, and then assume renovations track with that metric.
Here's a practical example: Let's say you're considering remodeling your 10 x 5 primary bath (50 square feet), and your home value is $200 per square foot. By that math, your bathroom renovation should cost in the $10,000 range, right?
Wrong.
We can't tell you how often we put together ballparks or formal estimates and receive the following feedback: "My house is only worth $200 per square foot, and you're telling me this bathroom will cost $700!?"
So, is calculating your renovation project by cost per square foot a myth? To answer that question, let's consider "The Steak Dinner Principle" (which we completely invented).
Not everything on this plate costs the same…
If you go to a nice restaurant and order ribeye with mashed potatoes, green beans, and a side salad, you know you're paying for the whole plate of food, but the ribeye is the most expensive item. It's also the entire reason you ordered the dish.
Your home is like that ribeye dish. Each room of your house carries a specific cpsf, some higher and some lower. A space like a kitchen, bathroom, or screen porch is comparable to the ribeye: highly desirable and the most expensive spaces in your home. But keep in mind the three bedrooms and bonus room - the "sides" if you will - in your home carry a significantly lower cpsf, thus counterbalancing those pricey spaces and giving you the general cpsf value of your home. Below is a helpful graphic showing where renovating specific rooms lands on the cpsf spectrum.
The natural follow-up question to the above graph is, "Why are some spaces so much more expensive than others?"
The simple answer is time, labor, and materials.
Let's consider a primary bathroom, get even more specific, and consider just the tile shower. In this little 4 x 4 space, the following has to happen:
Demo and examination of no water damage
Plumbing in preparation of new fixtures
Electrical in preparation of a vapor fan
Waterproofing
100+ sq/ft of tilework (and tile material cost)
Plumbing of new fixtures (and fixture cost)
Installation of a glass door (with hardware)
Electrical installation of vapor fan (and fan cost)
Trim and paint
In contrast, a bonus room above the garage could be 20 x 30; all it needs is a couple of electrical outlets, sheetrock, carpet, and paint. The cost per square foot could be in the thousands in the shower, while the bonus room would be below $100.
One important thing to note: typically, the more desirable spaces in a home carry the highest cpsf. Thus, as you spend more on improving these spaces, you add value to your home. When you walk into a home, the first things are spaces like the primary bath, screened-in porch, and kitchen.
Conclusion:
So, is calculating your renovation by cost per square foot a myth?
In our experience, mostly yes.
Yes, it is a myth that you can't estimate the cost of the space you're considering renovating (which, more often than not, are the high cpsf spaces) based on the value of your home in cost per square feet. Remember the Steak Dinner Principle: not every item on the plate (or space in your home) costs the same.
However, investing in the most common spaces will add a deeper joy to living in your home and ultimately increase its value if you ever decide to move.