What is the median home price?
One of the best ways to evaluate a local real estate market is to use the median home price. The median price can be compared to various periods to find a trend. It can be compared against the prior month, quarter, year, and other periods.
How is the median home price determined? Median is defined as the middle number in a sorted list of numbers. Another way of defining median is a mathematical result that indicates that one half of the group is higher and one half lower. The median price of 101 sold homes would be that price of the 51 home. This would show 50 of the home prices are lower and that 50 are higher than the median price. If there is an even number of total sales, the middle two numbers are averaged to get the median.
One big problem with the median home price is that it is often confused with the average home price. They can be quite different for the same group of home prices. For example, if the sold properties are very evenly distributed, the median and average might be very alike. However, if the homes sold were weighted more to one high end then the median and average could be quite different. This is why the median price can give a clearer picture of the local real estate market.
The median is used in real estate to hedge against wide variations in purchase price that may skew the average. The average is sometimes called the mean price. The median price is used to show a better middle ground for the overall market.
Below are some median home prices for Super bowl cities.