# Speaking of Statistics...What's the Difference Between Median Price and Average Price?

Ever been confused by media reports of housing prices  and the cost of home-ownership? The media usually report median or average prices without really explaining what that means.  The news is always talkng about how housing is becoming less and less affordable and that the median price is climbing up like crazy everywhere. But what is a median price, why look at it and how it's different from average price?

Well the median home price is one of the most common measurements used to compare Real Estate prices in different markets, areas, and periods. It is said to be less biased than the mean (average) price since it is not as heavily influenced by a small number of very highly priced homes. A median is the price where 'half the homes sold for more and half sold for less.'

The median price  however doesn't give any indication of the spread of these prices. Many properties are sold at much lower - and higher prices, of course - than the median price. Clear as mud eh?

Suppose we take 7 houses that were sold and sort their prices from lowest to highest (in thousands )

250, 252, 278, 286, 302, 325, 339

Median price here is 286, because it's in the middle of range - 3 prices are lower and 3 prices are higher than it.

The average price  - Is where an average price is - the total dollar volume of homes sold for a particular period, divided by the number of properties sold.

Average prices are typically reported for the sales activity in a given area for a given month, quarter or year, and provide a snapshot of past activity.

To calculate average price we have to add up all of the prices and then divide by the number of houses, so that:

Average price = (250 + 252 + 278 + 286 + 302 + 325 + 339) / 7 = 290

However, average prices of properties sold in the past give only a limited indication of what housing inventory for sale is priced at today. What this shows basically is  who rules the market in a certain place (suburb or area) at certain time (i.e. 3 or 6 months or a year): if there are more people buying expensive houses than cheap ones, it will go up, but if there are more people buying cheap property than expensive - it will go up.

You sort of have to know what housing is doing in a particular community to put these average prices into perspective.

So there you go!

Also see:

How Do I Find a Good Realtor?

Is It Wrong to Work With More Then One Realtor?

Don't Have a Site Survey - Title Insurance - Should You Get It?

If you or someone you know is thinking of Buying or Selling property in Cultus Lake, Chilliwack, Hope, Abbotsford, Langley or anywhere in the Fraser Valley Area of B.C. - or if you would like more information please give Liz  Moras of Landmark Realty Chilliwack a call at- 604-799-0459 or e-mail at lizmoras@gmail.com.

Copyright © 2009 By Liz Moras, All Rights Reserved. All photos taken by Liz Moras and copywritten.  Please do not use without permission.   Information provided by this author is only an opinion, it is not guaranteed, may be based on information collected from several sources, and may be time sensitive.  It is not necessarily representative of the opinions of Landmark Realty Chwk. Ltd.

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28 Comments on Speaking of Statistics...What's the Difference Between Median Price and Average Price?

20 Most Recent Comments Displayed Show All

NOV
09
2009
 Very useful info Liz.  It clears up a lot.I like the new picture. 10:56pm • #9
 Liz - great explanation. I should reblog also. I typically give out both numbers but never actually explained it DUH! ~Rita 10:58pm • #11
 Great post.  I use both of those numbers and have always *oh dear, assumed people understood them.... btw- I love love love your new photo. 11:22pm • #12
NOV
10
2009
 Liz - Brilliant post explaining the difference betwenn Median and Average.  I think this will have to be re-blogged for my area!  Thanks so much! 6:05am • #13
 Liz, This is an excellent point and one I bring up repeatedly to sellers. There are so many aspects taken into consideration when pricing a property..average sale price for comparable properties, average square foot prices (buyers dwell on this one) on comparable properties and where the median price is to strategically place the asking price. 7:33am • #14
 Great explanation -- love it! I never quite new what median is, thanks for clarifying! 9:05am • #15
 Great math lesson teach.  I like to use the median price here in Oakville to show people that it actually is affordable.  Because we have a lot of high end properties the average price really does not tell the true tale of our marketplace. 10:00am • #16
 Gee, Thanks Liz, now I can explain it and sound like I know what I am talking about! Ty 12:54pm • #17
 Great post Liz, super informative should help lot's of people.    Cheers! 1:01pm • #18
 Awesome! I love the explanation... I'm seeing some good posts tonight that are providing genuinely useful information for the consumers! gj! 9:45pm • #19
 Yeah Lisa its probably time some of us starting focusing more on our clients! lol thanks Chris - hope so! 10:23pm • #20
NOV
11
2009

Having cried and migrained my way through my college statistics class, I'm very grateful for this refresher--especially since every search I perform brings up a column of Median. I hadn't given it much thought. But I can categorically say that the MODE in Port Angeles for the last month, for houses priced under \$200K is \$178,900. Square footage doesn't appear to play a part in this pricing scheme. But then that could have been the mad dash to the \$8,000 tax credit line. It will be interesting to see where the MODE shows up next. Liz, I was actually interested in reading about stats. Thanks!

12:08am • #21
NOV
14
2009
 Very Good and Clear Information/explanation... I have to reblog! thanks 1:32am • #22
 Thanks for all the comments and feedback - do feel free to re-blog and share! :-) 1:38am • #23
 As a measure of central tendancy, the median is almost always more telling than the mean = less prone to distortion due to extreme values. 2:50am • #24
 Hi Liz...Great Post explaining Median and Average real estate prices. Cheers 5:39pm • #25
NOV
15
2009
 Thanks Fred! I had a lot of people ask me what the difference was so I thought - gee I should write a post about it!   Jim - um yeah - exactly what you said! lol Debra -yes you're welcome to re-blog! :-) Sherry -isn't that funny -? I had a major block about math and stats for most of my adult life -until I took a stats course and forgot me calculator......I was the only one to ace the exam - it transformed how I look at me and numbers! :-) 10:23pm • #26
 Lisa - don't you love it when you learn something new? :) Chris - nice to see you here! :) Ty - it always helps when we know how to explain it! :) Jenny - yes perfect way to use it! I'm glad Kathy! 10:25pm • #27
 Dorie -all to true - if they only knew ! :-) Good Leesa -please do :-) Tammy - thanks about the photo - yes when you see the glazed over look in their eyes - it's a hint! ;-) Rita - I find I often take for granted what the public knows and what is new to them! 10:29pm • #28
 Darrell - Thank you * and Thank You! :-) Gary - yeah well not everyone knows as much as you do! lol Debi - if people don't use that process in their day to day they may have forgotten een if they knew it! 10:31pm • #29

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Liz Moras ~ Chilliwack Realtor, Garrison Crossing,Chilliwack, Abbotsford

Harrison Hot Springs, Cultus Lake

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