Price Per Square Foot in Austin
This price-per-square-foot reference for Austin custom homes pairs with our 9-step custom home building process guide. Jenkins Design Build works primarily on homes in the $3M to $20M range, with $10M being around the median. For the regional luxury market context, see our guide to luxury homes in Texas. For the architectural styles framework that shapes per-sqft cost, see our catalog of luxury home design styles in Austin.
Cost per square foot is a common measurement in today’s home valuation, and Austin is no different. It is used by Realtors, Banks, Appraisers, and others, but experienced professionals do not use that valuation alone, and neither should you.
In this article, we will look into the pitfalls of using cost per square foot as the primary valuation of a home. It is my opinion that cost per square foot (s.f.) may be one of the least effective tools for measuring a home’s value in the custom home market.
At Jenkins, our typical budget for a single home is made up of over 600 line items. The factors that affect each line item can be varied and numerous. There is no one-size-fits-all answer to the question, “What is the cost of building a luxury house?“.
Take roofing material as an example. Is a clay tile roof imported from Italy the same cost as a 20 year shingle roof, or even a concrete tile roof? It is not. The import cost alone is much more, as the National Association of Home Builders has noted. Not to mention the necessary framing changes to accommodate the weight of the tile, the numerous flashing and underlayment options, etc.
To summarize, just within this one line item – roofing materials – there can be a variety of alternatives, each of which has a ripple affect on the rest of the budget.
Allow me to illustrate further. Here is an over-simplified example. Let’s say these are the costs for two different homes – House #1 and House #2. Both homes are 10′ x 10′ or 100 square feet (SF).
| House #1 | ||||
| Item | Quantity | UOM | $/UOM | Total $ |
| Foundation | 100 | SF | 20.00 | 2,000.00 |
| Walls & Roof | 100 | SF | 30.00 | 3,000.00 |
| Windows | 0 | EA | 500.00 | 0.00 |
| Doors | 1 | EA | 800.00 | 800.00 |
| Baths | 1 | EA | 5,000.00 | 5,000.00 |
| Kitchen | 1 | EA | 10,000 | 10,000 |
| Porches | 0 | SF | 40.00 | 0.00 |
| Outdoor Grill | 0 | EA | 100.00 | 0.00 |
| Garage | 0 | SF | 45.00 | 0.00 |
| TOTAL | 100 | SF | 208.00 | 20,800 |
| House #2 | ||||
| Item | Quantity | UOM | $/UOM | Total $ |
| Foundation | 100 | SF | 20.00 | 2,000.00 |
| Walls & Roof | 100 | SF | 30.00 | 3,000.00 |
| Windows | 11 | EA | 500.00 | 5,500.00 |
| Doors | 1 | EA | 800.00 | 800.00 |
| Baths | 1.5 | EA | 5,000.00 | 7,500.00 |
| Kitchen | 1 | EA | 15,000 | 15,000 |
| Porches | 25 | SF | 40.00 | 1,000.00 |
| Outdoor Grill | 1 | EA | 100.00 | 100.00 |
| Garage | 50 | SF | 45.00 | 2,2500.00 |
| TOTAL | 100 | SF | 348.00 | 37,150 |
Now, before you decide which house you are going to purchase, look carefully at the difference between these two homes. House #2 is a whopping 78% more for the exact same 100 square foot! What a rip-off, right?
Well, House #1 also has no windows. Meanwhile, House #2 has windows on all sides, a nice covered porch, better appliances, a garage, and an extra 1/2 bath. Still want the first house?
My point is that if you multiply those cost differences by 600 different line items, pretty soon the two houses start to look really different even though they are the exact same size.
Let’s take the analysis one step further and look at how the dollar per square foot is calculated. The porch and garage do have a real cost, and it is $3,250.
However, the spaces like the porch and garage are not included in the calculation for dollar per square foot because the calculation generally only includes the air-conditioned spaces.
So, in real terms, the garage and porch alone added over 15% to the total cost.
Now let’s look at what happens when you reduce the overall size of the home. When we reduce the home to 80 square feet, the cost per square foot goes up by 19% on Home #1 and 28% on Home #2. Why? Because certain fixed costs can’t be eliminated.
So reducing the size of the home just increases the dollar per square foot cost. So another factor in the equation is the overall size of the home.
In case you still aren’t convinced, consider the way we price other items we purchase such as cars and trucks. .
Have you ever heard of anyone calling a car dealer to ask him for the cost per seat of a car? Probably not. And if you did, wouldn’t it make sense for the 5-seat Toyota Camry to cost at least twice as much as a Corvette? After all, the Camry has over double the number of seats.
Then again, if that were the measure of value, we would all be driving minivans, wouldn’t we? Or… would we?
Beyond Cost Per Square Foot: What Actually Determines Home Value
So, given all of this, rather than the cost per square foot, how might we value a home?
One fact is certain, when the home is built, it is largely priced based on the materials, land value, and labor. So, in effect, that is a great starting place for the value. However, what about the home that (and we’ve all seen them) just isn’t all that appealing to the public and won’t sell for what it cost to build?
That’s, I think, where we could have another useful metric…the “Builder factor”.
There are some builders who have a reputation for building beautiful high-demand homes. Their homes typically yield 10% to 20% more in the marketplace than their counterparts. I think that could be a useful metric. Maybe I’m biased, but if it adds real value to the bottom line, like ours tend to, that does seem like a valid metric.
There could be a small risk factor for new builders, where they haven’t established a reputation just yet. Then, there could be a reduction factor for those whose homes don’t tend to sell as well. It would be relatively easy to pull the numbers from the MLS database. If banks, realtors, and appraisers could factor that into their calculations, it could help everyone agree on a valuation.
Understanding the price per square foot in Austin requires looking beyond a single number. Market trends in the single family home sector show that the price of square foot can vary significantly based on location, finishes, and design complexity. While a real estate agent might quote an average price per square foot that reflects broad market conditions, Austin’s luxury custom home market tells its own story. A 2,000 square feet home with unique features and high-end finishes will always carry a higher price per square foot than a larger home with basic specifications. When evaluating how a home is priced, consider the total square footage alongside the total sales price rather than trying to calculate the price per square foot in isolation. The sale price of comparable homes and the quality of livable space provide a far more accurate picture of value than any single metric.
