Published 7 September 2026 · By Jatin Dua, Broker of Record, RE/MAX Quantum Realty
Because above $3 million the price is mostly land, and land is not measured in interior square feet. A 5,000 square foot house on a 40-foot lot and a 5,000 square foot house on a 100-foot ravine lot can differ by millions, and per-square-foot pricing treats them as identical. Add inconsistent measurement standards, unfinished versus finished lower levels, and a comparable set of three or four sales, and the number stops meaning anything.
It works reasonably well in the condominium market, where units are standardised and measured to a common standard — which is why new condominium construction averaged $1,189 per square foot in the first quarter of 2026 against $859 in resale, a record 38% gap. For houses at the top end, use land value, replacement cost and a short list of true comparables instead.
The number everyone quotes and nobody interrogates
“They got $1,100 a foot.” It is the most repeated sentence in Toronto real estate conversation, and above $3 million it is close to meaningless. Here is precisely why.
Reason one: you are mostly buying land
At the top of the Toronto market, the majority of the money is in the lot. Interior square footage is a measure of the building — the part that depreciates, that can be replicated, and that will eventually be renovated or replaced.
Consider two houses, both 5,000 finished square feet, both in good condition, three kilometres apart:
| House A | House B | |
|---|---|---|
| Interior area | 5,000 sq ft | 5,000 sq ft |
| Lot | 40 ft × 120 ft, interior | 100 ft × 200 ft, backing a ravine |
| Rebuild potential | Constrained by the envelope | Constrained by ravine and tree bylaws |
| Replaceable? | Yes, many similar lots | No, fixed supply |
| What per-square-foot says | Identical | |
Per-square-foot cannot see the second row, which is where nearly all of the difference in value lives.
Reason two: nobody measures the same way
There is no single measurement standard universally applied to resale houses in Ontario. Depending on who did the measuring, a stated square footage may or may not include:
- Below-grade finished area, and whether it is counted at full value, half value or not at all
- Stairwells, at each level they pass through
- Garages, mudrooms, sunrooms and enclosed porches
- Exterior wall thickness, which alone can shift a large house by several hundred feet
- Areas with sloped or low ceilings
Two honest professionals can produce numbers 15% apart for the same house. A 15% error in the denominator makes every per-square-foot comparison you build on it worthless.
Reason three: the comparable set is too small
Neighbourhood per-square-foot averages work when they are drawn from hundreds of sales. Rosedale recorded twenty sales above $3 million in four months of 2026. Filter for similar lot, age and construction quality and you may have three. An “average” drawn from three properties is not an average, it is an anecdote.
What serious valuation uses instead
1. Land value on its own
Start by asking what the lot would sell for with no house on it. Look at teardown and bare-lot sales of similar frontage, depth and zoning in the same pocket. Then adjust for what constrains a rebuild: whether the lot sits in a mapped ravine protection area or a TRCA regulated area, whether it falls inside a Heritage Conservation District, how many trees over 30 centimetres in trunk diameter stand on it, and what the zoning envelope actually permits.
2. Depreciated replacement cost of the improvements
What would it cost today to build this house on this lot, and how much life is left in it? A ten-year-old, well-built house with current mechanicals retains most of that cost. A 1968 house with original systems, however charming, retains far less — and a buyer planning a full renovation will price it accordingly.
3. A short list of true comparables, including the failures
Three or four genuinely similar sales beat thirty loosely similar ones. Include expired and terminated listings: they tell you where the ceiling was, which is information the sold data cannot give you.
The practical takeaway
When someone quotes you a per-square-foot number above $3 million, ask three questions. What measurement standard produced the square footage? How many sales is the average built on? And what were the lots? If they cannot answer all three, the number is decoration, not analysis.
The one honest use of the number
Per-square-foot is useful as a sanity check in one direction only. If your price implies a figure wildly outside anything the neighbourhood has ever achieved, that is worth investigating — not because the average is right, but because a large deviation usually means something specific about the property that you should be able to name in a sentence. If you can name it, the number is fine. If you cannot, the price probably is not.
Frequently asked questions
Why does price per square foot not work for luxury houses?
Because it ignores the land, which is the majority of the value at the top end. It also ignores lot shape and frontage, ravine or water exposure, ceiling height, the quality and permanence of the construction, and whether the lower level is finished, walkout and counted at all. Two houses with identical interior areas can differ by several million dollars for reasons per-square-foot cannot see.
Is there a standard way square footage is measured in Ontario?
Not one that everybody follows on resale houses. Builders, listing agents, appraisers and municipal records can all arrive at different numbers for the same house, depending on whether below-grade area, garages, stairwells and exterior wall thickness are included. Always ask what standard a stated figure uses before comparing it with anything.
Does price per square foot work for condos?
Much better, because units are standardised and generally measured to a consistent builder standard. That is why the published condominium figures are usable: new construction averaged $1,189 per square foot in Q1 2026, down 5% year over year, while resale averaged $859, down about 25% from the early-2022 peak.
What should I use instead when pricing a luxury house?
Three things together: the value of the land alone, the depreciated replacement cost of the improvements, and a genuinely comparable set of recent sales including expired and terminated listings. Where they converge is your price. Where they diverge tells you what is unusual about the property.
How do I find out what the land alone is worth?
Look at what bare or teardown lots of similar frontage, depth and zoning have sold for in the same pocket, then adjust for constraints — ravine and TRCA regulation, heritage district rules, protected trees over 30 cm in diameter, and the zoning envelope. If the land value approaches the asking price, you are effectively buying a lot with a building on it.
Do appraisers use price per square foot?
They use it as one input among several, and they adjust heavily for land, site and quality. What they do not do is apply a neighbourhood average per-square-foot figure to a subject property and call it a value. That is the shortcut that causes most of the errors.
Thinking about buying or selling at the top end?
Send me the address, or the shortlist you are considering. I will tell you what the property is actually worth today, what the land is worth without the house, what the transfer tax and carrying costs will be, and whether the deal makes sense. Confidential, always.
connect@jatindua.com · 437-987-1925 · Book a free consultation
Confidential. Read personally and answered within 24 hours. I never share, sell or distribute your information.
Related reading
- How luxury homes are actually valued in Toronto
- Toronto luxury real estate in 2026: what the numbers actually say
- What actually moves house value in Toronto and the GTA
- Free AI home valuation for Toronto and the GTA
Sources
Everything above that is a rule, a rate or a published number comes from these. Verify anything that matters to your own deal.
- Real Estate Magazine — Q1 2026 condominium pricing and inventory (Urbanation data)
- RE/MAX Canada — 2026 Spotlight on Luxury Real Estate, Greater Toronto
- City of Toronto — Municipal Code Chapter 813, Trees
About the author — Jatin Dua, Broker of Record
I’m the Broker of Record at RE/MAX Quantum Realty, 799 The Queensway in Etobicoke, and I work with buyers, sellers and investors across Toronto and the west GTA. A large part of my work sits in the upper end of the market, where the comparables are thin, the rules are heavier and the cost of a wrong number is measured in hundreds of thousands of dollars.
The free estimators on this site are mine. I built them because the first question every owner asks is “what is it worth?” and the honest answer starts with a number you can check yourself. connect@jatindua.com or 437-987-1925.