Of the 7 closed sales this past week, 3 of them had price/square foot numbers in the 500's. One of those homes, a 2,190 SF, 3 bed/2.5 bath Spanish-style Bungalow on Oak Avenue, was actually a beautiful property with several recent renovations, but ultimately it's final sales price suffered from location. Location is key in determining the max possible sales price a home can get you. While a home owner may see value in continuing to make improvements to their property, at a certain point the market value added by those improvements is inhibited by the property's location. A property's market value can only increase as high as the demand for that property will let it, and even with all the renovations in the world a homebuyer's desire to live in a particular location is capped at a certain price point.
This isn't to say that Oak Avenue is a totally undesirable location, but it is a relatively busy street with a less desirable school system than say, Mt. Carmel. You put that same exact property, on the same sized lot somewhere in the Mt. Carmel neighborhood, we are probably looking at a final sales price somewhere in the mid to high $1 millions with price per square foot numbers closer to the $750-$850 range. Instead, it sold for $1,275,000 (582/SF).
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