Key Investment Tools: Median Prices

15th October, 2015
  • Median prices are the most useful measure available for those looking to find out information about the cost of homes in an area.

    The median is the midpoint between a high and a low. Median prices are not the same as average prices, and, in fact, are much more useful than average prices.

    As a matter of fact, median prices are the standard measurement of home prices in the real estate industry. This is because of the nature of median prices versus average prices.

    To calculate a median price you arrange all of the prices in a set of numbers in order, and then choosing the number in the middle (or by calculating an average of the two numbers in the middle if the set of values is odd).

    To calculate an average you add up all prices in a set, and then divide them by the number of prices that were in that set.

    Why are median prices more useful than average prices?

    The problem with an average price is that it includes outliers – that is, homes priced well above and well below the cost of other homes in the area. These outliers skew the average and leave you with a price that does not accurately reflect the asking price of houses in the area.

    Additionally, the median price is a much better reflection of real-time market activity and allows individuals better insight into their own real estate transactions at a given time.

    Knowing the median price in a given area allows investors to determine if a specific property is a worthwhile investment, whether they are accounting for the median price of homes available for sale or they are interested in knowing the average cost of leases within a given area.


    by: Prime Asset Investments

Comments (0)

Recent Posts

Featured Posts

  • product HOUSING MARKET CONTINUES GRADUAL CLIMB BACK TO NORMAL IN USA

    According to the NAHB/First American Leading Markets Index, markets in 146 of the approximately 340 metro U.S. areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the second quarter of 2016. This represents a year-over-year net gain of 66 markets.

    9th August, 2016
  • product ZIKA VIRUS MAY AFFECT PROPERTY VALUES IN PARTS OF MIAMI

    Miami's trendy Wynwood neighborhood, which experienced a huge boom in property values over recent years, now faces a tremendous amount of fear and uncertainty as a result of the arrival of the mosquito-borne Zika virus says Barry Sharpe, who heads Miami-based Property Tax Appeal Group.

    9th August, 2016
  • product NEW HOME SALES IN U.S. REACH HIGHEST LEVELS SINCE 2008 MARKET CRASH

    According to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes in the U.S. rose 3.5 percent in June 2016 from an upwardly revised May 2016 reading to a seasonally adjusted annual rate of 592,000 units. New home sales are up 9.3 percent in the second quarter of 2016 from the first quarter.

    28th July, 2016