Median or Average?

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The news media and the government like to use the median home price when reporting on housing prices.  The median home price is the price that is in the middle and shows that half of the people who bought homes paid more for them and half paid less.  So if three homes are sold and one sells for $50,000 and another sells for $60,000 and a third home sells for $200K the median price is $60,000.  The average price using the same numbers is $90,000.

I point this out because most of my buyers and sellers are more concerned with averages and so are appraisers and that is why I use so many averages on this blog instead of computing the median, but I can compute the median. 

Today for all of those out there who like the median I computed the median price for homes sold in St. Paul in 2010 and that number is: $122,000 which is not to be confused with the average price for the year of $148,155.

The average sale price for St. Paul homes for 2009 was $136,000 and the median sale price was $116,875.  It is safe to say that home prices went up in 2010 from what was probably an all time low for the decade but it should be noted that there were  30% fewer home sales in 2010 than there were in 2009.  For a more complete picture of the last two year and the last decade see:  a look back on a decade of home values.            

Which number do you like to use and to know the median or the average, or both?

The numbers used in this post were gathered from the Northstar MLS. The numbers are deemed reliable but not guaranteed and include all single family homes within the city limits of St. Paul, MN which does include townhouses and condos but does not include rental property, although any home included in the numbers could now be a rental property.   

See the Local market conditions and home values category for more numbers. 

9 Replies to “Median or Average?”

  1. We use median in New York more often because the high end skews the numbers by about $200,000. The “average ” guy isn’t in a $900,000 house.

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  3. In our area the prices are all over the map. Coming from the science background that I do – the standard wisdom is that the low and high numbers skew the average – such that in most cases it is best to use median. However, our markets are split in terms of volume and pricing. I am actually splitting the analysis between high end and low end. For example – prices are rising in the high end and still going down in the low. I can’t say prices are flat – they aren’t so in some areas simple median is not even a close reflection.

  4. As a (sometime) home buyer, I prefer to see median prices. Especially with low sales volumes, it’s very easy to skew an average one way or another. Median tends not to vary so widely.

  5. I’m surprised to hear that overall home sales were down 30% last year. There was such a boost from the tax credit I thought that helped the overall real estate market a bit. Throw in all of the short sale and foreclosure activity and I thought we would have been down more like 10%. Thanks for setting me strait.

  6. Teresa Boardman says:

    The tax credits made for a good first half.

  7. Actually median is an average, as is mean (arithmetic mean is what we typically call average) as is mode (which is the most often repeated value). Each tells a slightly different story and each can be useful depending on the data being analyzed and the purpose of the analysis. It sometimes can be useful to determine all three to get a handle on just what is going on in your market(s).

    1. Teresa Boardman says:

      I suppose I could do a mode too and you are right it depends upon what is being measured.

  8. I have always preferred to use the average. But I like some of the comments supporting medians. So I guess I will be going with both from now on.

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