NEWSFLASH: Half Of All Homes Sold Sell Below Median Price!

Reblogger Devona Garrigus
Real Estate Agent with Coldwell Banker Kivett-Teeters

The sky is falling again!!! Well, not really....

The definition for Median Price is: the numerical value separating the higher half of a sample, for example home prices, from the lower half. The median of a finite list of numbers can be found by arranging all the observations from lowest value to highest value and picking the middle one. (source)

So you see, the median price of say California home prices is the middle of all prices.

CA SHORT SALE AGENTS

Original content by Liz and Bill Spear SAL.2002007747

BalanceNEWSFLASH:  Half Of All Homes Sold Sell Below Median Price!

That's right, HALF of all homes in Warren County sell below Median Price.  It doesn't matter whether you live in Mason, Lebanon, Waynesville, Springboro, Franklin or anywhere else, HALF of the homes in each community will sell below Median Price for that community!

Sounds terrible doesn't it?  And if I was a reporter with the agenda of pushing bad news, I could make this routine fact sound horrendous.  Of course, I could just as easily say HALF of all homes sold sell ABOVE Median Price.  Both statements are true when you understand the context of the numbers.

The real estate market is all about numbers, but those numbers without context and understanding don't really tell you the story.  For instance, is average price or median price more relevant?  First, we need to understand the difference between median and average.

AVERAGE PRICE:  Take ALL homes sold, add all the prices together and
balancedivide by total number of homes sold for the time period you're examining. 

MEDIAN PRICE:  Rank all homes from least to most expensive.  Go to the middle home in the stack, and that is your median price.  You're dividing
the list in half.  Median Price is the balance point of the ranking, just like standing in the middle of a see-saw.

Let's make a theoretical case to illustrate:

Community Fairwinds had 5 homes sell last month, priced as follows:

$200,000
$210,000
$225,000
$235,000
$825,000

The Average Price is:  (200,000+210,000+225,000+235,000+825,000)/5 = $339,000

The Median Price is the home in the middle:  $225,000

Now which price is more representative of Fairwinds community?  $339,000 or $225,000?  $225,000 right?  Just like the old Captain Kangaroo game "which one of these is not like the others", that $825,000 isn't like the rest of the Fairwinds.  Maybe it's in a pocket of luxury homes, maybe it came with 50 acres of land, but something about that home made it worth almost four times as much as the other homes.

Now anytime we have small populations of numbers, it's easier to shift the numbers.  But even in real life, a few sales on one side or the other can tilt the view.  Let's take two real world cases from right here in Warren County to illustrate.  In each case, we're taking Cincinnati MLS data for 2012
Mason condo for saleresidential sales year to date completed in the school district listed.

Mason Schools:
132 Sales completed 1/1/12 - 4/16/12
Median Price:  $260,000
Average Price: $289,127
Min Sale:  $39,000
Max Sale:  $1,660,000

That's quite the range isn't it?   The Average price is over $29k ABOVE Median.  And you see that 1.66 million dollar sale?  BY ITSELF, it shifted the average up $12,575.  That's one powerful home!

Lebanon Schools:Lebanon Ohio home for sale
84 Sales completed 1/1/12 - 4/16/12
Median Price:  $154,723
Average Price: $145,000
Min Sale:  $12,000
Max Sale:  $425,000

Now here the spread isn't as drastic.  And you'll also notice that in this case the Median is HIGHER than the Average price.  In this case, there were five homes sold below $50k, and that pulled the average DOWN.

In
both cases, the Median price gives a truer representation of the "typical" home in the community rather than the Average that can be heavily influenced by homes on either ends of the extreme.

Overall, watching the Median Price trend will give you the best overall indicator of a community's housing health.  A consistently rising or falling Median Price gives you the pulse of that real estate community. 

Should you sell?  Should you buy?  The answers are in the numbers and fully understanding the context.  Call your local REALTOR® team for the full explanation of how it effects YOU and your home, or your potential home to be.

Serving Warren County's residential real estate needs,
Liz and Bill aka BLiz

The Liz Spear Team
Elizabeth & William Spear
RE/MAX Elite:  Ask for us by name if you visit the office!
Two locations: Lebanon & Mason, OH
Office direct: 513-248-3660
  Liz direct:  513-265-3004
Bill direct: 513-520-5305 Fax: 866-302-8418
      EHO

MailTo: Liz@LizSpear.com  Our Website: Warren County Ohio Homes

 

 

 

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Rainmaker
997,080
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Devona... I know your title is supposed to be cute, as that is what the Median Price IS... but there will be so many folks who will really believe what a horrible market that implies.  And there are still those politicians who want to cut funds for education even more than they have been.  Yikes.

Apr 19, 2012 11:25 AM #1
Rainer
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Devona Garrigus
Coldwell Banker Kivett-Teeters - Redlands, CA
1 (888) 9-LIST-IT

Actually Karen, this is a reblog of Liz and Bill's post.

I think the title shines light on the fact that people need to know the meaning of the words they are reading before they jump to conclusions.

Apr 19, 2012 11:32 AM #2
Ambassador
1,550,863
Liz and Bill Spear
RE/MAX Elite 513.265.3004 www.LizTour.com - Mason, OH
RE/MAX Elite Warren County OH (Cincinnati/Dayton)

Thanks for the reblog!

Apr 19, 2012 11:35 AM #3
Rainmaker
997,080
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Devona... I know it is a re-blog.  Whenever I read a re-blog I like, I usually comment on both the re-blog and the original blog post.  Have a wonderful weekend.

Apr 19, 2012 11:54 AM #4
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Rainer
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Devona Garrigus

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