Price per square foot (p/sf) can be a deceptive thing. I often run across clients who look at this price measure as the most legitimate indicator of home value, often projecting the price per square foot of one property onto the square footage of another to derive value.
Per the remarkably high price per square foot measure of the latest lakefront sale, 39035 North Shore at $1146/sf, I searched the Big Bear MLS for the highest p/sf properties to have sold. Not surprisingly, all of the top properties in the p/sf category were lakefronts.
Take a look at the highest sales in Price Per Square Foot, all over $1000:
The measure of note here is the square footage of all these homes. Not one of these lakefront properties are over 2000 square feet, exemplifying the rule that the smaller the property (and all other things being equal), the higher the price per square foot.
The reason for this can be seen in separating the land costs. For instance, looking at 164 Round, the land value alone of this property was probably around 1.1 to 1.2 million dollars. The structure itself had very little value. This assumption applies to all the other lakefronts as well; the land value of Big Bear lakefront properties exceeds that of the physical structure the majority of the time.
So if I were to own a neighboring lakefront home to 164 Round, and my home was 4000 square feet, if I applied the price per square foot of my neighboring property, I would compute the value of my home to be almost 5 million dollars - a totally unrealistic price.
A more accurate way to look at the price of my property would be to back out the structure value of 164 Round realizing that the lot is worth 1.1 million dollars. Then I would have to value my structure. Since my house is newer, I know that the cost to build would be about $300/square foot which gives me a $1,200,000 structure value. Add that to the $1,100,000 of the lot value and my home is estimated to be $2.3 million. As you can see, this is a quite different valuation from the valuation derived from simply applying the price per square foot.
But this method by itself is not entirely accurate. Several different methods must be looked at in estimating a home's value, especially a lakefront property. Ultimately, there is a good deal of subjectivity in valuing a Big Bear lakefront home. There's just too many intangibles that come into play when evaluating lakefronts, such as water depth, wind exposure, architecture type, lot and/or house orientation, floor plan, feel, etc. That's why having an experienced agent specifically familiar with lakefront properties to guide you in the valuation process is essential.