Median vs. Average

[Drew Barnes (Illinois)]

When determining the change in a neighborhood's value range, do you use... a median sales figure or an Average sales figure over a given time period and WHY?

 

[Howard Klahr]

Both. Neither. It depends. There are many indicators that are relevant in market analysis.

 

[Tom Woolford]

When determining the change in a neighborhood's value range, do you use... a median sales figure or an Average sales figure over a given time period and WHY?

I usually graph both. They usually are very similar, but its just another level to the analysis, and does not take that much time. I tend to place most emphasis on median because one outlier can seriously skew the data for average in a given month. Median is not that sensitive. If you closely filter that data and eliminate the outliers, you can improve the reliability of the average, but then your manipulating the data which I tend to avoid.

 

[AnonApprsr]

Usually both.

 

[Scott R Marshall]

I tend to agree to analyze both but my experience has been that median can at times be more reliable. While it is an absurd example lets use the following:

Sale 1: $150,000
Sale 2: $150,000
Sale 3: $152,000
Sale 4: $152,000
Sale 5: $154,000
Sale 6: $185,000

Median is $152,000, average is $157,000. Median in this case is a much better indicator as only 1 of the 6 sales sold above the average. Of course the more data you have the less likely that 1 or 2 anomaly sales will impact your number significantly.

 

[Flygirl 152]

Another indicator to determine market conditions in a neighborhood is price per sq. ft.

 

[Couch Potato]

Both. Neither. It depends. There are many indicators that are relevant in market analysis.

Well said.

 

[Lee Lansford]

Both. Neither. It depends. There are many indicators that are relevant in market analysis.

"What Howard said!"

 

[Lee Lansford]

Beware movement in median or average sold prices in an area with non-homogeneous housing and having a variety of transaction statuses (REOs/Short Sale vs. "traditional") as the indicator of changes in housing values.

 

[Lakefront boater]

Beware movement in median or average sold prices in an area with non-homogeneous housing and having a variety of transaction statuses (REOs/Short Sale vs. "traditional") as the indicator of changes in housing values.

This is the reality of my market areas I work., especially REOs/Short Sale vs. "traditional".