Real Estate Investing Information Blog

There are two main ways in which home prices are recorded: median and mean. Prices are also considered by square foot, using both the mean and median price. Real estate prices have had a profound contact on urban, as well as the suburban and rural landscape.

Median home price
The median home price is the entrance which divides the real estate market into two equal halves, in reference to pricing. One half of all homes in the market are priced above the median home price, while the other half is priced less than it. For instance, the median home price in the United States was $213,900 in the fourth quarter of 2005, meaning that half of all homes in the US were priced over $213,900, and half were priced under $213,900. Within California, the median home price was $548,000.

The median home price is one of the mostly common measurements used to compare real estate prices in different markets, areas and periods. It is said to be less biased than the average since it is not as deeply influenced by the top 2% of homes. For instance, the average home price in the US was $264,000 in October 2005, compared with a median home price of $213,900 for the same time period.

Mean home price
The mean home price, or average home price is the sum of all home prices in a certain area, divided by the number of properties in the similar area. For example, within the Willowood Townhouse complex in Salinas, California, there were five townhouses for sale in March of 2006. The properties were priced like follows: one for $450,000, one for $459,000, two for $465,000, and one for $499,000. The amount of all of these properties is $2,338,000. This number is after that divided by five, which equals $467,600. Therefore, the mean home price for a townhouse inside Willowood was $467,600 in March 2006.