Median Value

[editor]

I know there are a lot of real estate types on HAIF, so this seems like a good opportunity to ask:

Why does the real estate industry use MEDIAN prices for homes in statistics instead of AVERAGE home price?

[TheNiche]

Why does the real estate industry use MEDIAN prices for homes in statistics instead of AVERAGE home price?

We use both, but the median is more representative of the typical homebuyer, whereas the average is often quite a bit higher than median because of a relatively few high-end outliers in the data.

Even using median prices by themselves can be misleading. Within different price bands and submarkets, there are often trends that go unnoticed without a more thorough analysis of the data.

Edited December 29, 2006 by TheNiche

[editor]

We use both, but the median is more representative of the typical homebuyer, whereas the average is often quite a bit higher than median because of a relatively few high-end outliers in the data.

Even using median prices by themselves can be misleading. Within different price bands and submarkets, there are often trends that go unnoticed without a more thorough analysis of the data.

But aren't there also cases where unusually low selling prices throw off the median, too? Like when a company sells a piece of property to another company or a charity for $1. Or are those so rare it doesn't matter?

[TheNiche]

But aren't there also cases where unusually low selling prices throw off the median, too? Like when a company sells a piece of property to another company or a charity for $1. Or are those so rare it doesn't matter?

Those are thrown out of the stats entirely because they are not market-rate transactions.

Most of the stats reported in the media come from MLS services, anyway. The cases where property is basically given away or included in some convoluted deal typically aren't listed, so they wouldn't even make it into the dataset.