Median. Mode. Average. Range.

Remember these words from the math classes you took in high school? Or was it elementary school? That just shows you how much I remember from my math classes! If I had understood back then how I would actually use this information, I probably would have cared to learn it a little better (at least that is what I tell myself in hindsight).

Once I started my career in real estate these words took on a new importance. The average and median are especially important when looking at pricing and trends. The difference between these two terms can be confusing and sometimes a little misleading:

What is the difference between “median” & “average” price?

• The term “median price” is often used to describe whether market prices are heading up or down.

• The median price is the point where half the homes sold for more and half the homes sold for less.

• The average price is simply that, add them up and divide by the appropriate number.

Why is the median price comparison a better indication of pricing trends?

• An average number is influenced by the extremes.  Higher end sales impact to cause average price to increase.

• Median number is not influenced by the high and low extremes.

While the average price in your area may be important in factoring how long your home will be on the market, changes in median price is the true reflection of pricing trends.

By Amanda Serra