Median
Median Vs Average Values in Real Estate
Median values show a more accurate view of the market since they are typically less affected by large variations in the data. For example, let’s assume that the project you are looking at includes 5 properties, as shown below along with their respective transacted prices.
Property #1 … $350,000
Property #2 … $370,000
Property #3 … $310,000
Property #4 … $1,200,000
Property #5 … $335,000
The first thing you might notice is that one of the prices is not like the others. Property #4 is priced much higher than the rest. This will have a significant affect on the average value, which happens to be $513,000. (sum all prices and divide by total transactions)
To determine the median, we first sort the list in ascending order, then pick the middle value, which is $350,000. See below:
Property #3 … $310,000
Property #5 … $335,000
Property #1 … $350,000
Property #2 … $370,000
Property #4 … $1,200,000
Comparing it to the average, the median value is a much more realistic interpretation of this market.