Orange County Real Estate Terms Median Price Average Price What is the difference?
What is the difference between "median" & "average" price?
The term "median price" is often used to describe whether market prices are heading up or down. The difference between these two terms can be confusing and sometimes a little misleading.
The median price is the point where half the homes sold for more and half the homes sold for less. The average price is simply that, add them up and divide by the appropriate number.
For Example:
Let's take 9 of the homes that sold in Corona del Mar, California in January 2008.
-
$930,000
- $1.050,000
- $1,060,000
- $1,160,000
- $1,206,000
- $1,550,000
- $1,950,000
- $2,200,000
- $2,950,000
The median sales price would be $1,206,000, which is quite different from the average sales price of $1,561,778.
One sale can change the median price significantly. Let's get rid of the $930,000 and say a different home sold for $4,155,000.
The new median sales price would be $1,550,000. The new average sales price would be $1,920,111.
While over time, you can see a trend using the Median Sales Price, it doesn't do a buyer or seller much good once he has zeroed in on a particular area and wants to know what prices are doing. This number is too volatile to be used in the short term.
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Have real estate questions? Contact Sandra Carlisle at (949) 500-0482.
Orange County Real Estate Terms
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