The Washington Business Journal on Thursday wrote, “Home prices in District neighborhoods were mostly higher than a year ago, with the median price of a house or condo that sold in D.C. in March hitting an even $500,000.
We talk about housing prices using “average” and “median.” What’s the difference?
Judy Hedding at About.com wrote an article explaining the difference. First, let’s show how the median price is arrived at:
Here are 11 fictional home prices.
The median price of these 11 homes is $105,000. Five homes were lower priced and five homes were higher priced. The median, really is the middle value. 50% of values are above it, and 50% below it. So when the data is not symmetrical, this is the form of ‘average’ that gives a better idea of any general tendency in the data.
The average price of these 11 homes is $498,000. That’s what you get if you add up all those prices and divide by 11.
What difference does it make? Knowing how average and median are arrived at gives you information you can act on. Suppose you are looking for a house and your realtor says, “The average price of a house in the Washington DC/Baltimore are is $498,000.” You might get discouraged if you are looking for a house priced at $105,000 and think, “Honey, we can’t afford to live here. The average house is way above what we can afford.”
However, if your realtor says, “The average price of a house here is $498,000, but the median house is priced at $105,000.” You could take heart that you will find something in your price range for of all the houses on the market right now, 50% are priced at $105,000 or lower
Both averages looked at over time, will give you information about the state of the real estate market nationally and locally, but doesn’t give you enough information to make you a happy first time home buyer.
One who can make you happy is Trusted Homebuyers. We are here to help homeowners out of any kind of distressed situation. As investors, we are in business to make a modest profit on any deal, however we can help homeowners out of just about any situation, no matter what! There are no fees, up-front costs, commissions, or anything else. Just the simple honest truth about your home and how we can help you sell it fast to resolve any situation.