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The Average vs Median Sales Price

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Real Estate Agent with Barcode Properties BRE # 01828994

When I write my market reports, I often provide the average and median sale price of properties.

Those numbers are often different and buyers should understand why:

Average Sales Price:

All sales are added together and divided by the number of sales.

Median Sales Price:

All sales are lined up from lowest to highest, the sale in the middle is the median sales price.

In Real Estate we usually use median figures to describe market statistics because it is not influenced by extreme numbers.

For example, if most of the properties in the area are sold in $500,000 range but one house is sold for 1 million:

AP: (450k+480k+500k+550k+1mln):5= $596k

MP: would be $500k.

Comparing MP to AR,  it is clear that the median value is much more realistic interpretations of the housing market.

calabasas housing update

National Association of REALTORS® provides this definition:

''A mean (average) is calculated by adding up all the values in a distribution and then dividing the sum by the total number of values contained in that distribution. To find a median value, one takes all of the values in the distribution, sorts in ascending order, lines them up and finds the middle value.''

 

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This Active Rain post is created by Inna Ivchenko.

Thank you so much for checking my blog,  likes and comments! 

                                               

Inna Ivchenko

RealtorⓇ, Cal DRE # 01828994, GRI, PSC, HAFA 

Barcode Properties at Calabasas & Beverly Hills

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Comments (29)
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Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

And thanks so much Debbie for a little push up. I really need that. I want to get over that hump as soon as possible:)

Apr 13, 2015 07:17 PM
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

Lawrence "Larry" & Sheila Agranoff. Call 631-805-4400 (c) it is true. But I think, the public needs to look only at similar houses data. The medium and average prices are meaningless for estimating the price of the individual house.

Apr 13, 2015 07:18 PM
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

James Dray , sometimes they are. Clients always ask, but that house two doors away is sold for <this> low!!! without knowing that that house had foundation issues and mold! They should look how much 'normal' =medium price in the area without any extremes.

Apr 13, 2015 07:21 PM
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

Thanks Kristin Johnston, Waukesha Realtor 414-254-6647 ! I appreciate it!

It is true, Bruce Hicks :) But my area is very populated, we have comps for everything. Especially now, in some hoods all properties are sold fast with multiple offers. Looking at comps, median and average prices would be just a waste of time.........got to act fast;) But if someone is interested in data, changes in Median price can provide a lot of interesting information.

Apr 13, 2015 07:26 PM
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

This is good information for consumers. Thanks for the post.

Apr 13, 2015 09:09 PM
Jeffrey DiMuria 321.223.6253 Waves Realty
Waves Realty - Melbourne, FL
Florida Space Coast Homes

Inna...not just buyers...I cannot tell you the number of agents I speak to that do not understand the difference.

Apr 14, 2015 12:27 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Inna, great explanation of these two terms, as the public often wonders how they differ.

Apr 14, 2015 01:13 AM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

This is an excellent explanation of the difference between the average and median prices. You are correct, the median reflects the market better than the average.

Apr 14, 2015 04:20 AM
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

Thanks Gita! I appreciate it!

Joan, not just public:) I agree with Jeffrey DiMuria 321.223.6253 www.SpaceCoastHomesNow.com , I'm sure it is true:)

 

Apr 14, 2015 04:20 PM
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

Jane Peters , great seeing you here!

I was busy these few days. But I'll try to check on those two guys again later this week.  Thanks again for thinking of me! Hope, one day we will close:)

Apr 14, 2015 04:23 PM
Roy Kelley
Retired - Gaithersburg, MD

This is a good explanation. Home sellers and home buyers will appreciate your local market reports.

Apr 15, 2015 03:47 AM
Eric Valente
Calabasas, CA
Eric

Thanks for reminding. I actually forgot the difference. We are usually focused on more specific criteria to determine the price of the property. 

Apr 16, 2015 01:32 PM
Rob Thomas
Prestige Homes of The Tri Cities, Inc. CALL....423-341-6954 - Bristol, TN
Bristol TN-VA & Tri Cities Agent, ABR, GRI, e-Pro

Inna Ivchenko ....Very nice! Looks like you will hit 500K any day now ...Congrats!

Have a great weekend!

Apr 17, 2015 09:38 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Even the median can  be misleading at times. Because I have a steady client there, I've been watching the San Diego market for a few years. When everything crashed, the investors moved in and essentially "bought up" most of the low-end houses. For a while that tilted the median to the low end because few homes on the high end were being sold.

Then when there were hardly any low end homes left for sale, and thus very vew sold, the median shifted upward.

That made it appear that prices were rising, when in reality, it had nothing really to do with the comparative value of any specific house.

Apr 17, 2015 05:01 PM
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

Thanks Roy! I appreciate a comment!

Glad to help, Eric:)

Thanks Rob! Yes, almost there:)

Apr 17, 2015 05:05 PM
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

Marte Cliff I am very much agree with you.

Statistics can be very useful, but it can be misleading. Not all real estate agents have a good grasp on statistics -- it is not a part of our training or daily work; but we usually know our neighborhoods and  can give good advice on the market value of a home.

A question one should ask his agent: "How do you determine a market value"? Apples should be compared to apples and bananas to bananas:)

Apr 17, 2015 05:10 PM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

I believe it was Mark Twain who said "There's lies, damn lies, and statistics." 

A talented person can twist and turn those statistics to make them serve the purpose and show whatever they want shown. (Just look at our unemployment statistics today.)

Personally, I've always thought looking at those numbers and putting them into reports was fun. But then, I thought doing a market analysis was fun, too. I like words - and I also like numbers. (But please don't ask me about Geography, Chemistry, or anything techie!)

Apr 18, 2015 03:24 AM
Eric Valente
Calabasas, CA
Eric

I never was a fan of statistic. As you said it can be misleading and it is so easy misinterpret it. 

Apr 18, 2015 11:52 AM
Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

Hi Inna -- good explanation of the number side of our business.  I find our value in the real estate equation comes from our ability to explain the stories behind the numbers and how they impact our buyers and sellers.

Apr 18, 2015 06:15 PM
David Popoff
DMK Real Estate - Darien, CT
Realtor®,SRS, Green ~ Fairfield County, Ct

Great explanation, I prefer the median sales price numbers as well.

Apr 20, 2015 10:27 PM
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Inna Ivchenko

Realtor® • GRI • HAFA • PSC Calabasas CA
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