Statistics for pricing your Philadelphia home can be very useful, but also misunderstood or even misleading.
I was running some comps for a client to help her arrive at a competitive price for her home when the question of average price verses median price came up. Which is more accurate, most useful, and how do these values affect your pricing strategy?
The term average, also known as the mean, refers to the sum of all values divided by the total number of values. So take all the homes currently for sale in your market, add up all the asking prices, calculate the sum, and then divide that sum by total number of listings. We have just calculated the average asking price for listings in your market. In the chart above the average / mean price of all listings in January is $250,319.
The median price is also easy to calculate. Using the same list of active listing prices, arrange them in order from lowest price to highest. Next find the value that is in the exact middle of the list. If there are an even number of properties find the two values that occupy the middle space and take the average of those two to get the median value for the entire list. That value is the median asking price. In the above chart the median price is $224,450.
Median values tend to show a more accurate view of the market since it’s less affected by large fluctuations in price. Extremes in a range can skew an average. In the example below notice that one of the properties is priced much higher than rest. This has a big effect on average value which is $408,980. The median value is $269,900. Comparing it to the average value, the median is a considerably more realistic interpretation of the market.
Not only can the median give you a good idea of the price of real estate in a certain neighborhood, it can also give you an overview of an area’s performance over recent months, years or decades.
Median value is just one tool of many used to best arrive at a competitive price for your home. Having an understanding of median sale prices can add an extra dimension to your property selling skills. If you would like some extra help pricing your home for sale contact us and we’ll do our best!