What is Median Home Price & Why Does It Matter?

Median home price is the literally the 'middle' of the market when measured overtime is one of the best ways to track home values in a market.

How Is Median Value Determined?
The median value is found by ranking all sales in a month from smallest to largest price, and then simply reporting the sale price from the middle of the rankings. For instance, if there were 1000 closed sales in the month, the sale ranking at 500 would be the median home price that month.

Why Not Use Average?
The sale of very high-value properties will skew the results when measuring the 'average home value' in a market. Some months there are a handful of sales exceeding $5-10M in the county, and other months there are just one or two. This volatility in the luxury market creates the unfounded perception of volatility in the overall market when watching average prices.

Median Value Under-Reports Long Term
Over the long term in metropolitan areas, median value will skew toward lower growth than actually is occurring due to the growing diversity of housing inventory. As smaller houses, townhomes and condos make up a great share of the market both in number and dollar volume of sales, it will moderate the growth of median property values.  This means owners of older homes with relatively large lots in and around cities where more dense housing is being built should expect to see their values grow slightly faster than median home prices since their properties are becoming more rare with each passing year.

Market Analysis
Median home value is a very broad measure of the market and it's health. For the better estimate of your value, you should consider visiting our home valuation site, or for the best estimate of your home's value give us a call and we'll provide a complimentary market analysis.