What Does Median Home Price Mean...And Why Should I Care?

By
Real Estate Agent with Cedaredge Land Company
http://actvra.in/4NMR

What Does Median Home Price Mean...And Why Should I Care?

Most people understand the average home price in a neighborhood, but don't understand the median price and why it's used. What does this mean, and why should you as a home buyer or seller care?

The median price (number) is the middle number of all of the properties in an area. So for example let's say you have seven homes listed in a particular neighborhood. To determine the median price of these listings you write down the numbers from lowest to highest. The median is the middle number. If you have an even number of properties, you take the two middle numbers and find the average of them. That would then be your median price. 

Why might you be concerned about median price versus average price? The median price can often be a more accurate representation of the value in a neighborhood. Median prices aren't affected by large price deviations. 

What Does Median Home Price Mean...And Why Should I Care?Here's an example to better illustrate my point:

You have seven homes listed in a neighborhood. You want to know the average listed price.  So here are the prices:

$200,000

$210,000

$225,000

$230,000

$245,000

$250,000

$1,500,000

What Does Median Home Price Mean...And Why Should I Care?The average listed price of these properties would be $408,571. Is that a fair representation of neighborhood prices? No. The median listed price in this neighborhood is $230,000. In this case the median value best reflects the pricing for this neighborhood. An average price would throw the neighborhood value way off. Now this example may seem extreme, but it really gets the point across. 

The median price can also give buyers an idea if a particular neighborhood is in their price range. Median prices can also be looked at over time to see how a certain area or neighborhood stands in the local market. 

Keep in mind the median price is only one factor that should be considered. Not all homes are the same. Upgrades and location should also be given consideration. This is where it's best to have a real estate agent help you determine a fair neighborhood value for a particular house. 

I've lived on Colorado's Western Slope for over 26 years. I love this area and all it has to offer, and I enjoy sharing what I know about my home. As a REALTOR®, I also love to share my expertise in this area as well. If you need any real estate information for Montrose County, or Delta County, Colorado...please give me a call.

 

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Topic:
Home Buying
Location:
Colorado Delta County
Groups:
Addicted to Active Rain
Bananatude
Tags:
delta county co real estate information
cedaredge co real estate market information
delta county co real estate market information

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Rainer
308,890
Raul Rodriguez
Covenant Partners Realty - San Antonio, TX
Looking out for the client's interest and not my p

Sold prices should also come into the equation in determining a list price.

Jan 15, 2016 08:32 PM #32
Rainmaker
2,023,056
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

Congratulations on the Feature Debbie Laity, I love your blog today. Knowing what a median value is and how to obtain it is a must for proper valuations on a home. Average only works when all homes are the same. 

Jan 15, 2016 09:04 PM #33
Rainmaker
277,267
Blatt + Cutino
Keller Williams Coastal Estates - Monterey, CA
Broker-Associate 831/206-8070*Call today*

Thank for this clear explanation. I will use it. I enjoyed reading this post. It makes so much sense.

Jan 15, 2016 09:54 PM #34
Rainer
432,251
Richard Bazinet /MBA, CRS, ABR
AZuRE Team - Realty ONE Group - Scottsdale, AZ
Phoenix Scottsdale Real Estate

Wow Debbie, very good! That's advanced math. I'm not so sure the 'average' agent knows the difference between an average and the median. Great illustration too! Good job.

Jan 15, 2016 09:54 PM #35
Rainmaker
885,384
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

Great example. The average prices tend to always be skewed higher because of the higher end expensive homes.

Jan 15, 2016 10:07 PM #36
Rainer
154,136
Chris Lima
Keller Williams Realty-Treasure Coast - Port St Lucie, FL
Local or Global-Allow me to open doors for you.

This is a great example that was explained in a clear and concise manner.  Thank you!

Jan 15, 2016 10:15 PM #37
Rainmaker
2,038,530
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

This would make a good question for a Real Estate exam that you wouldn't hate

Jan 15, 2016 11:30 PM #38
Rainmaker
678,856
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

You perfectly laid this out for the consumer to understand and it's not wonder it got the gold star!

Jan 15, 2016 11:32 PM #39
Rainmaker
1,327,045
Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC
Waters Realty of Brevard, LLC - Rockledge, FL
... a small office, delivering big service!

Good explanation. My opinion is buyers should avoid going above the median price (value) in any neighborhood they are buying into because you never want the high end of you neighborhood.

Jan 16, 2016 01:43 AM #40
Rainmaker
557,127
Olga Simoncelli
Veritas Prime, LLC - New Fairfield, CT
Broker-Owner, RE Consultant, Licensed in CT & NY

I must admit I mostly use average prices, but your "extreme" example shows how that could be misleading. Guess it's best to look at and present both stats.

Jan 16, 2016 01:56 AM #41
Rainmaker
470,551
Claude Labbe
Real Living | At Home - Washington, DC
Realty for Your Busy Life

That was such  a great example; I'll think the next time I'm asked the question, my mind will think "use the Debbie example with $1.5m".

Surely good karma will come from me to you then.

Jan 16, 2016 02:15 PM #42
Ambassador
2,109,400
Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

I absolutely love your comment, Claude Labbe . I believe in karma and send all of the good stuff my way. I'm glad you liked this post. I did go extreme with my example, but that's because sometimes you have to slap people in the face with stuff. Of course I mean that figuratively. And you know this post wasn't written for the agents and other members of AR, but for the public. Thank you for stopping by. 

Jan 16, 2016 03:20 PM #43
Rainmaker
2,384,379
Michael Jacobs
Coldwell Banker Residential Brokerage - Pasadena, CA
Los Angeles Pasadena Area Real Estate 818.516.4393

Hi Debbie -- excellent and very relevant post topic especially with the example you share.  The story behind the numbers is so important.  

Jan 17, 2016 02:08 AM #44
Ambassador
2,109,400
Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

Thank you everyone for stopping by with your great comments. I had fun writing this post and now I'm linking to it in my market reports. 

Jan 19, 2016 08:55 AM #45
Ambassador
3,050,112
Praful Thakkar
Keller Williams Realty - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Debbie Laity - very nicely put - yes, median price does help understand where majority of homes stand in pricing.

However, I have seen sometimes that is little misleading. So both median and average list price are important.

Jan 19, 2016 11:54 AM #46
Rainmaker
42,087
Ninah Hunter
Major Mortgage (NMLS# 129122) - Montrose, CO
Your Western Colorado Mortgage Pro

Great explanation and example, Debbie!  I remember somewhere in my distant early education a formula for determining "average" that would also throw out the top and bottom numbers for that very reason, not to distort the actual average price or value for high or low anomolies.

Feb 20, 2016 05:35 AM #47
Rainmaker
2,117,666
Rebecca Gaujot, the Go To Realtor®
RE/MAX Vision Quest - Lewisburg, WV
Lewisburg WV Real Estate, Greenbrier County

Debbie, you gave a very clear explanation and one that consumers can understand. Bookmarked to use in the future :)

Aug 02, 2016 11:26 AM #48
Ambassador
2,109,400
Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

Thanks, Rebecca. I'm glad you like this post. 

Aug 02, 2016 11:34 AM #49
Rainmaker
2,022,381
Tony and Suzanne Marriott, Associate Brokers
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

Debbie Laity "Why might you be concerned about median price versus average price? The median price can often be a more accurate representation of the value in a neighborhood."

Right on target - and - re-blog!

Dec 23, 2016 02:20 AM #50
Rainmaker
466,311
Thomas J. Nelson, Realtor, CRS
Big Block Realty - La Jolla, CA
Co-Host of Mail-Right's: Real Estate Agent Podcast

A great, text book explanation all can understand. Most neighborhoods in San Diego do not see much difference between Median & Average Solds due to track housing & PUD/HOA's. However it does come more into play in our older neighborhoods like Metro ie. Balboa Park Neighborhoods, where every home is unique as most were built one at a time in the 1900-1920 era.

Dec 23, 2016 06:48 AM #51
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