A developer’s read on price-per-square-foot reality, land cost fundamentals, and what the data is really telling you

Let’s cut straight to it. $400,000 is a real number for a lot of American homebuyers right now. It’s not entry-level in most coastal markets, and it’s not aspirational in the Midwest. It’s a benchmark — and what it buys you depending on where you’re standing is one of the starkest illustrations of how broken the national housing narrative actually is.

Homes.com ran the data on 12 months of home sales across 10 major markets. The headline? A $400,000 home in Cleveland averages 3,252 square feet. The same dollar in New York City gets you 235. That’s not a rounding error. That’s nearly a 14-to-1 ratio. That’s the market telling you something.

Here’s my read on what it’s actually saying.

The Land Cost Problem Nobody Wants to Talk About

I’ve said this before and I’ll keep saying it: the price of a house isn’t really about the house. It’s about the land under it, the regulatory environment around it, and the cost to put anything in the ground in the first place.

A developable lot in Houston runs you $40,000 to $80,000. That same lot in California can cost $400,000 before you’ve poured a single yard of concrete — and that’s before you get into impact fees, CEQA review, and the rest of the entitlement gauntlet that adds 18 to 36 months and hundreds of thousands of dollars to any project. This isn’t a mystery. It’s policy. And buyers are paying for it whether they know it or not.
When you’re looking at these 10 markets, you’re not just comparing square footage. You’re comparing decades of zoning decisions, infrastructure investment, political will (or the absence of it), and the cost structure that developers face when they try to bring product to market.

The Numbers, Market by Market

Chicago — $400K buys ~1,311 sq ft. Median sales price in March was $362,500, up 3.6% year-over-year. Chicago remains one of the most undervalued major metros in the country relative to its density, economic infrastructure, and housing stock. The city’s historic two- and three-flat typology is genuinely irreplaceable, and the pockets of affordability in neighborhoods most coastal analysts have never visited continue to attract buyers priced out of the coasts. I remain bullish on Chicago and have written about why at length. The fundamentals have not changed.

Cleveland — $400K buys ~3,252 sq ft. Median price $242,000 — the lowest of the 40 markets Homes.com tracked. Sales prices rose 5.2% year-over-year, seventh-highest rate in the study. When a market has the lowest median price and one of the highest appreciation rates, you’re looking at early-stage demand pressure in an undersupplied market. That’s worth paying attention to.

Denver — $400K buys ~971 sq ft. Listed in the data at a 1908-era building in the Central Business District. Denver has been repricing for years as in-migration from California compressed the supply side. You’re essentially buying location and walkability at this price point, not space.

New York City — $400K buys ~235 sq ft. Median sale price $730,000. Active listings in March: 21,415. The product at this price point is co-op shares, not fee-simple ownership. You’re buying into a building corporation. The maintenance fees are real, the board approval process is real, and the resale constraints are real. For an owner-user, it’s a lifestyle purchase. As an investment thesis, it’s complicated.

Philadelphia — $400K buys ~1,709 sq ft. Median sale price $380,123, up 4.2%. Philly’s rowhouse and townhouse supply dominates the market. The city offers genuine value relative to its East Coast counterparts, and the 5-plus bedroom townhouse you can still find at this price point in neighborhoods like Wissahickon is not something you replicate in Boston or D.C.

Houston — $400K buys ~1,932 sq ft. Median sale price $331,000, down 2.1% year-over-year. Houston leads the nation in active listings with 40,710 in March. This is what happens when you have no zoning and a functional permitting process — supply responds to demand. Buyers have options. Prices stay in check. The city is doing what the market is supposed to do, and the rest of the country should take notes. The intra-city price spread is also worth noting: less than 5 miles separates River Oaks from some of Houston’s most affordable neighborhoods. Location within a market matters as much as the market itself.

Miami — $400K buys ~741 sq ft. Median sale price $580,000. Miami has repriced dramatically post-pandemic and the luxury high-rise pipeline has transformed the skyline, but the sub-$500K buyer is largely competing for older condo product in secondary locations. The 800-square-foot, 1950-vintage unit in South Miami-Kendall at this price point is a concrete illustration of where the market sits for non-luxury buyers.

Phoenix — $400K buys ~1,216 sq ft. Median sale price $460,000, flat year-over-year. Phoenix is the master-planned community capital of the American West. The development machine there has been running hard, and the inventory — 25,923 active listings in March, fourth-most nationally — is showing it. Flat appreciation in a high-supply environment is the expected outcome.

Los Angeles — $400K buys ~508 sq ft. Median sale price $915,000, down 1.1% year-over-year. I’m based in Los Angeles. I develop here. And I’ll tell you directly: $400,000 in this market buys you a studio or a small one-bedroom in a secondary location, period. The cost structure to build here is the highest in the country. That is a direct function of regulatory friction, labor costs, and land scarcity. Until that changes structurally, the fundamental math doesn’t change.

Portland — $400K buys ~1,216 sq ft. Median sale price $552,500, up 1.4%. Portland punches above its weight on price relative to its economic base. The Craftsman bungalow stock in neighborhoods like Irvington is genuinely attractive product, but the city’s policy environment has constrained supply in ways that continue to drive prices higher than underlying demand would otherwise support.

What the Peak-2015 Data Is Actually Telling You

Here’s the detail that gets buried in most coverage of this data: average new home sizes in the U.S. peaked in 2015 and have been declining since. The median square footage of a newly completed home rose 44% from 1987 to 2015 — driven by rising household wealth and growing families. Then it reversed.

Shrinking household sizes and denser urban lots are part of the story. But so is the affordability squeeze. Developers are building smaller because buyers can’t afford larger. That’s not a cultural preference. That’s price-per-square-foot economics working on the supply side. Meanwhile, price-per-square-foot nationally has more than doubled since 2000, with the Northeast and West outpacing the Midwest and South significantly. The divergence is widening, not narrowing.

The Bottom Line

$400,000 is not a uniform number. It is a number that gets filtered through land costs, regulatory environments, development economics, and local supply dynamics before it expresses itself as square footage, location, or product type. Understanding those filters is what separates an informed buyer from a reactive one.
Square footage matters. But as any developer will tell you, you’re not buying square footage. You’re buying land value, access to opportunity, and a bet on what a market does next. Sometimes that bet is 235 square feet in Turtle Bay. Sometimes it’s 3,200 square feet in Cleveland. The question isn’t which is bigger. The question is which is the better position.
That answer depends entirely on what you’re trying to accomplish.

Daniel Kaufman is the Principal & CEO of Kaufman & Company, a vertically integrated real estate development and investment firm based in Los Angeles. Follow his market commentary at danielkaufmanre.substack.com and thekaufmanco.com.