Have you ever wondered if there is a value difference between a single-story house and two-story house? Is it proper to list your home at the same price level as a similar-sized house that has one extra level?
I asked some Sacramento area real estate pros to pitch in a few thoughts, and here is what they said:
Sue Galster – Realtor/Broker: By default, a one-story house appeals to a wider range of current home owners and future buyers than a two-story house. Rarely if ever do I meet a buyer who says they need or prefer a two-story house, but it’s quite common to hear that a one-story is a non-negotiable. With the aging of the Baby Boomers and people living longer, I believe more home owners will require a one-story house for health and safety reasons so that stairs aren’t an issue in their lives.
Steve Ostrom – Realtor/Broker: Over 30% of my clients say they must have a one-story. Another 40% say they prefer a single story. That is around 70% targeting single story. The number one reason they state is that they are getting older and worry about having to climb stairs later in life. The second reason is energy costs of a two-story. My reason is that my wife has a history of falling down stairs. Regardless of the reason, there is much more demand for single story homes than two-story, and supply and demand ultimately determines value.
Whitney Johnson – Realtor: I do think that if you are willing to purchase a two-story home on a same or similar lot size as a single story home, you will obviously get a larger lot, which could be a benefit. We have never taken a number of stories into consideration when comping our properties. We tend to go off the basics, bed, bath, sq ft. When I asked around office it was pretty split. Some would take a single story all day long and have a smaller lot. The other half would prefer a two-story larger lot. Both sides agreed the pricing should be the same.
Jeff Grenz – Realtor/Broker: Single level homes are always in high demand. They typically reach every end of the market from entry-level to empty nester…. so when demand is hot, the single levels typically go first, and when demand is slack, again, the single levels typically go first, leaving more excess inventory in the multi-story homes – unless the prices get adjusted to make multi-story homes a better buy. It actually costs less to build a two-story home vs a single level in most cases, given the same square footage and amenities, so builders are often able to balance the higher demand for single level homes with the better pricing for two-story homes. So if square footage is your measure of “value” than a two-story home, as efficiently shaped as possible, will give you the best “value” – a definition of an efficient building shape? Think “salt box” like the east coast. If accessibility is more valuable, and IMHO, higher demand for resale, then single levels are the best “value”.
Craig Dunnigan – Realtor/Broker: I have always held the opinion that single story homes sell for more money than a two-story of equal size….this is based on observing sales trends for over 35 years…. my opinion was confirmed today at our sales meeting. Our agents unanimously stated that single story homes are in higher demand and sell for more than most two-story homes…. The aging “baby boomers” don’t want to be walking up and down stairs. The bottom line is “supply and demand”…..there is not a vast supply of single story homes coupled with a high demand!
My take as an appraiser: I tend to compare single-story with single-story and two-story with two-story because there is sometimes (not always) a difference in value. Unfortunately there is no universal value adjustment given for a variance in stories because it really depends on the neighborhood as well as supply and demand. I have noticed among higher-end tract homes that buyers typically pay a premium for single-story units. As an example, a buyer would very likely pay more for a 2800 square-foot single-story house than a 2800 square-foot two-story house with similar updates. Whatever the case, it’s usually best to start a market comparison by using single-story comps when appraising a single-story house and two-story comps for a two-story unit. This tends to give us the best picture for value because we’re comparing “apples to apples” so to speak.
Question: Is there any price difference in your mind? I’d love to hear your take in the comments below.