From my experience most buyers don't think about price per square foot when they are purchasing a home. That isn't to say that they don't ever think about it, or that it isn't an important consideration when making a home purchase, but typically buyers will buy the house that is in the best condition and location and in the price range of their budget. If the price per square foot is higher or lower, that might be a factor, but overall they are judging the home on how it feels and if it feels like home. But lately I have been looking at the price per square foot numbers just because it is a decent reference point to use when you are touring properties. Also, if you are looking at building a new home the price per square foot number is important because appraisers use that number to get a general idea on how they value a proposed new construction property.
So I made this graph with the price per square foot of homes in Hale, Fulton, West Bloomington, and Chanhassen. I picked these neighborhoods because they are all pretty nice, high demand areas with a lot of great homes. The properties in Fulton and Hale are going to be older on average then the properties in Bloomington and Chanhassen, but the land is more valuable in Hale and Fulton so that is why the price per square is higher. The land in Bloomington is not as expensive, same with Chanhassen, and the homes are generally bigger then the Minneapolis neighborhoods.
Its nice to see all of the numbers next to each other on a graph so you can get a good idea on how much they vary in price from each other. Why is the land more valuable in Minneapolis compared to Chanhassen and Bloomington? At the end of the day, it comes down to supply and demand. There is just more demand for homes and not as many homes available in the higher priced neighborhoods like Hale and Fulton.
For example, in July 2020 there are 7 homes for sale in Hale compared to 98 in Chanhassen. Now Hale is a much smaller geographic area then Chanhassen, but there just aren't that many homes available at any given time in that area. And Hale is one of the nicest neighborhoods in Minneapolis. It is close to Minnehaha Creek, Lake Nokomis, Diamond Lake, has great public and private schools, and a lot of great restaurants. It is one of the few areas in Minneapolis that has all those elements of value so prices get bid up. So keep your eye on the price per square foot when you are touring properties. It is a good reference point. If you need helping buying give me a call. I would be happy to help.