Median Sales Price verse Average Sale Price

Here are some facts about the difference between Median Sales Price and Average Sales Price in Real Estate

Average Sales Price

Average sales price for a home is when you take all the sold data, this being from a neighborhood or city, and divide it by the total numbers of sold properties, this is how average sales price is calculated. The issue with this approach is you may have a home that sold far more than the homes in the neighborhood, for whatever reasons or you have a home that sold for way less than what homes are selling for in the area, again for whatever reasons. With an abnormal high sell and/or low sell of a home in the area, will not give you a true picture of the values in that area, in fact it can inflate the values or bring the value down.  

Median Sales Price

Median sale price is taking all the homes in the area, from the lowest to the highest. With this information you take the sold home price that is in the middle of the list and this will become the Median Home Price for the area.

So how is this information useful when determining your own home value or the value of a home that you wish to purchase? The best method is using the median home price approach because most properties in the area will be closer to the middle of the list. Median sells price will react faster to a changing market. Sellers dropping or raising their prices will affect median prices more so than average prices.

Average sales prices are always higher than median price and can be misleading when trying to establish a home value. For instance, if there is a home in the area that sold for 1.1 million when most homes are selling for around half that, this home will strongly change the value of the average price and this same home that sold for 1.1 million will have no affect on the median home price method.

A higher than normal sell price or lower than normal sell price of a home can and will influence the value of a home using the average sale price approach.

Salt Lake Data

At the time of this writing; sold data for Salt Lake County Median Home Price is at $425,000 and Salt Lake County Average Home Price is $487,059. That’s a $62,059 difference in values.