What is the difference between median and Average Home sale price?
When it comes to understanding the real estate market, two key metrics often come into play: the median and average home sale prices. While both provide valuable insights, they paint different pictures of the market.
Understanding Median Home Sale Price
The median home sale price is the middle value in a dataset when all the sale prices are arranged in ascending or descending order. To calculate the median, you list all the sale prices and find the one that falls exactly in the middle. The median home price is like the 50-yard line of real estate.
Understanding Average Home Sale Price
The average home sale price, is calculated by summing up all the sale prices in a dataset and then dividing that sum by the number of data points.
Median Calculation:
To find the median, we arrange the prices in ascending order:
- $350,000
- $350,000
- $375,000
- $420,000
- $450,000
- $475,000
- $510,000
- $750,000
- $790,000
There are 9 data points, so the median is the middle value:
Median = $450,000
Average Calculation (Mean):
To find the average (mean), we sum up all the prices and divide by the number of data points (9 in this case):
Average = ($350,000 + $350,000 + $375,000 + $420,000 + $450,000 + $475,000 + $510,000 + $750,000 + $790,000) / 9 = $529,444.44 (rounded to the nearest cent)
So, the median home sale price is $450,000, and the average home sale price is approximately $529,444.44 for this list of prices.
Conclusion
In summary, the median and average home sale prices are two essential metrics for understanding the real estate market. The choice between these measures depends on the specific context and the characteristics of the data. While the median provides a robust representation of the middle value and is less influenced by outliers, the average gives equal weight to all data points and can be more sensitive to extreme values. By considering both metrics, real estate professionals and buyers can gain a more comprehensive view of the housing market and make informed decisions based on their specific needs and goals.
Reach out:
Anja Drewes Neidhardt – Broker - Realtor
? Call/Text Direct at (713) 298 9177
? Email: sold@anjadrewes.com
? https://calendly.com/anja-/15min
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