In one line: Asking price divided by living area: the quickest way to compare unlike homes.
Price per square foot divides the price by the home's living area, turning homes of different sizes into one comparable number. It is the standard first-pass measure of whether a listing is expensive for its neighborhood.
It flattens what it cannot see: lot size, condition, layout, a garage, a view. Small homes also run higher per foot than large ones as a matter of arithmetic, because the land and the kitchen are spread over fewer feet. Use it to sort a list, then read the outliers, not to settle a price.
It is the backbone of Kouzr's comps read: a listing asking well under the area's dollars per square foot either has a story or has a deal, and the page's job is to help you tell which.
A worked example
A $480,000 home with 1,920 square feet of living area is asking $250 per square foot. If the ZIP's median is $230, it is about 9% above its neighbours before any adjustment for condition.
Questions people ask
Which square footage should I use?
The county assessor's living area, not the listing's. Listings sometimes count a converted garage or an enclosed patio; the assessor counts heated, finished space. Kouzr shows the county's figure on every listing page.
Why do smaller homes have a higher price per square foot?
Because the lot, the kitchen and the bathrooms cost roughly the same whatever the size, and they are spread over fewer feet. Compare like with like: a 1,200 sq ft home against 1,000 to 1,400, not against 3,000.