Why use median home price instead of mean in their real estate sales reports?

Question

give me several reasons y

Answer 1

Median = the # in the middle of the set.

Mean = average of the price; add up all the values & divide by the number of homes

Median is a more accurate indicator of a market because it is a closer reflection of the sample set.

Mean can be misleading. It doesn't show us what is actually going on in the middle of the range.

ex) two homes - one is valued at $500K, the other is $100K

There is no median - we'd know that the values are in extreme ranges.

The mean = 500K+100K divided by 2 = 300K but there aren't any actual homes listed in that range.

Also taking an average of a set of figures smooths out the data. An average can be skewed by a big set of numbers in the high range or the low range.

Homes are not identical. Prices are unique to location, features, time of sale, etc. Averages mute that uniqueness.

Answer 2

The mean can be skewed by one house that is worth a ton of money. If you had 100 houses that were all averaged about $40,000 and then one that was valued at $1 million, that would average $50,000. So if it said the average home was valued at $50,000 it would be misleading.

The other thing is that upper class homes would weigh in more heavily then lower class homes because the average really expensive home is more than twice that of the average lower class home.

The median gives a better over all picture of what the housing is like in that area, because half the people live in houses more expensive and half the people live in houses less expensive.

Answer 3

Let's say the median is $200, 000

The mean would be strongly influenced by homes that were very large and expensive. It is more important to know that there are homes "less than $200, 000 and greater than $200,000"

The median will not be influenced by that one rare "fixer-upper" that sold for $35,000, or that castle on the hill that sold for $5.6 million. But an average would be effected by those values and not really be representative of the market.

As a matter of fact, if you used mean, you would necessarily need to edit the data to remove such "outlier" values.

Answer 4

Why Use Median