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Your thoughts on median vs. mean

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Tim Schneider

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Joined
Feb 8, 2007
Professional Status
Certified Residential Appraiser
State
Wisconsin
I am working on a market summary (similar to Tawfik's) and would like your thoughts on whether mean or median is a more appropriate measure of home prices. Thanks.
 

Mexilady

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Joined
Mar 13, 2005
Professional Status
Certified General Appraiser
State
Tennessee
Median

The median is a more reliable indicator of the market as it is not driven by outliers (extreme high or low values). The mean can be driven by outliers.
 

jay trotta

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Feb 8, 2004
Professional Status
Certified Residential Appraiser
State
Connecticut
wood agree with Tiffany; also I think thats what NAR and the Alphabet News folk use, they use it in our state for reference.
 

PropertyEconomics

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Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Why not provide all indications, adjusted average (deleting the high and lowest indicators), median, and pure mean and have a strong explaination within your report as to which is better and the most indicative of market conditions?

I often futher divide the indications into price ranges as I find that very high properties will provide one set of market indications while affordable properties will provide quite a different picture on that segment of the market. In my market affordable homes continue to increase ever so slightly in value while mid to upper value homes are showing either stability or some decline, and that in an of itself is largely dependant upon market specific locations (ie one subdivision area or one sector of the city vs others).

Just some thoughts.
 
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Mike Boyd

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Jan 18, 2002
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Retired Appraiser
State
California
I don't think EITHER can be used as value indicators. However, both can indicate what market conditions exist if followed by an explanation.
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
I am working on a market summary (similar to Tawfik's) and would like your thoughts on whether mean or median is a more appropriate measure of home prices. Thanks.

Both are meaningful.
 

masmia

Sophomore Member
Joined
Oct 16, 2007
Professional Status
Certified General Appraiser
State
Florida
If this is for an appraisal it would depend on where your subject lies within the market. I have seen cases where the median has decreased but the properties most similar to the subject have remained stable or even increased in value. If it's for an overall description of property values I would go with the median.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
I think both can be meaningful. I typically use the median.

I think what is important to remember is this: The market summary is the background into which the subject-specific valuation is being placed. It provides useful information to the user and communicates two things:
A. Here's an indication of where the overall market stands.
B. Based on where the overall market stands, you [the reader] can judge where the subject stands in relation to the overall market.

So I think the best measurement to use is the one that best reflects where the market stands in general and in relationship to the point-value of the subject. To the degree that the subject's value varies with the general neighborhood will probably indicate how much explanation is warranted in the appraisal supporting the value-placement decision (explaining the valuation rationale).

Good luck! :new_smile-l:
 

Tim Schneider

Thread Starter
Member
Joined
Feb 8, 2007
Professional Status
Certified Residential Appraiser
State
Wisconsin
OK, here is what I have so far. The equation is for the median trendline, which should have been deleted since it is not applicable. To me the data is showing that upper end sales are skewing the mean higher. There was a mean of 120 sales per quarter. What would you take from this graph?
 

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