A new study by Matin Real Estate revealed striking differences in the average cost per square foot of residential property across U.S. states. The study highlights how land values, building costs, home demand, and regulations influence real estate pricing resulting in prices of $700 per square foot in the most expensive states down to around $130 per square foot in more affordable regions.
Hawaii was the most expensive cost per square foot of property at $694. This high cost is attributed to the state’s average house price of $850,000, the highest in the country, coupled with an average house size of 1,248 square feet.
Following Hawaii, California and Massachusetts rank second and third. In California, a square foot costs an average of $425.55, with the average house price at $774,500 and an average size of 1,820 square feet. On the other hand, Massachusetts has an average house price of $799,000 with an average of 1,914 square feet, resulting in a cost per square foot of $417.45.
New York and Rhode Island complete the top five. New York’s cost per square foot is $416.33, driven by an average house price of $654,475 and a size of 1,572 square feet. Despite having the fifth smallest property size out of all fifty states at 1,648 square feet, Rhode Island has an average house price of $537,000, equating to $325.85 per square foot.
Other states in the top ten included Washington, New Jersey, Montana, Oregon, and Colorado. Washington state ranks sixth overall with a price per square foot of $315.38, while New Jersey ranks seventh with a square foot of property costing $310.26. Montana, with the fourth highest property prices in America at an average of $675,000 and an average size of 2,182 square feet, has the eighth-highest cost per square foot at $309.35. Oregon and Colorado round out the top ten, with average prices per square foot at $302.36 and $287.11, respectively.
The study also revealed the states with the lowest average cost per square foot of property. Topping the list of cheapest states is West Virginia, where the average price per square foot is just $133.72. Mississippi follows closely with an average cost of $142.00 per square foot.
Ohio ranks third in this list, with a cost per square foot of $147.73. Kansas, with an average cost of $150.37 per square foot, and Arkansas, with an average price of $152.00 per square foot, round out the top five states with the lowest price per square foot of property.
These states offer significantly more affordable property prices than the top-ranking states like Hawaii and California. However, potential homebuyers must also consider other factors, such as local amenities, job opportunities, and quality of life, when deciding where to purchase property.
The study’s findings are particularly relevant in the current era, where more people are working remotely, and the size of a home has become a significant factor when looking for a new property. The spokesperson for PortlandRealEstate.com commented on the study, stating, “When looking for a new home, there are many things to consider, the local area, distance to loved ones, work opportunities, and more. However, the size of a home may be one of the most important factors.”
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What Causes the Difference in Price per Square Foot?
The average cost per square foot for a house can vary greatly between states due to several key factors. States with high land values, labor costs, building materials prices, demand, and strict regulations tend to have the highest prices per square foot. For example, coastal states like California, Hawaii, and New York have costly land limited by geography, high construction wages, and stringent building codes, all driving up housing costs.
Dense northeastern states like Massachusetts and New Jersey also have high taxes and land prices near major cities that make homebuilding more costly. On the other hand, states with more available land, lower wages, and less regulation, like Arkansas, Alabama, and Oklahoma, have significantly lower average square foot prices for residential real estate.
Local factors within states also have a big influence, with cities being more expensive than rural areas. Overall, limitations on developable land, high taxes and wages, strong demand, and stricter building rules are the key drivers that cause certain states to have higher average costs per square foot for housing.
About the Study
Matin Real Estate analyzed average property sizes and prices across each state, revealing a fascinating insight into the states that offer the best value prices for space in a property. Matin Real Estate specializes in real estate in the Portland area and was rated one of the region’s fastest-growing private companies in 2023 by the Portland Business Journal.