Median Price

Reporting Median house prices as a single measure statistic is commonly cited, however it can be misleading to Property Owners or Investor’s if they do not understand what a median price measure is. 

In this blog, we aim to clear any confusion of the measure and share some shortcomings from leaning on single measure reports as a conclusion to what house values are actually doing. 

To keep it simple, median means in the middle. The sale price of the middle home in a list of sales where the sales are arranged in order from lowest to highest price.

Median prices in property are based on the homes that have recently transacted.

Example Shown in below graph

5 homes sales in a market at prices of $350,000, $400,000, $450,000, $500,000, and $550,000 – the median (middle) price is $450,000

Median prices are beneficial for showing a “trending” market, such as the activity in the market. A consistent trend, either down or up, of median price over a measured period may represent the market which is current. A slower market, with longer days on the market, will exhibit a trend down and a hot market with fewer days on the market will see the median price trend up. 

It is important to note that a change in median price does not necessarily mean a change in your property’s value, and this may be where single measure reporting could confuse or mislead property owners and investors. 

Acknowledging that median price is a useful tool for understanding price changes from transacted properties in the market, however a reported 29% median price increase does not necessarily mean your property is worth 29% more. The value of your property could have even dropped during this time.

For example

  • If 10 multi-million-dollar homes came onto the market, and all sold in the last month this would raise the median price – however the value of a $400,000 home may not have changed at all.
  • Likewise, a falling median price in an area could mean that there were more lower end properties sold than higher end properties in that period.

Reporting medians only can also be misleading when a suburb has two distinct markets. Take Banksia Beach for example; a mix of modest properties and multi-million-dollar properties. Information from a median single measure would not accurately represent this suburb.

When researching property prices, we recommend using a variety of reporting methods, tools, and data sources to obtain the most accurate information available. Reliable resources will provide statistics, averages and comparable, but this will only take you so far. Engaging a trusted Real Estate Agent for an accurate appraisal of your property is free. There is no replacement for the most up to date “finger on the pulse information.”

Posted in Uncategorized on 17 Jun, 2022 | No Comments »

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