What is “Median Priced Homes”?

 

Let’s start with a definition of median;

 –adjective

noting or pertaining to a plane dividing something into two equal parts, esp. one dividing an animal into right and left halves.

 

situated in or pertaining to the middle; medial.

 

–noun

 

Arithmetic, Statistics. the middle number in a given sequence of numbers, taken as the average of the two middle numbers when the sequence has an even number of numbers: 4 is the median of 1, 3, 4, 8, 9.

 

The “median priced home” is the middle priced home between the lowest priced home sale and the highest. When the lowest priced home prices keep dropping, the median priced homes drop as well. When the media report that the median price of homes dropped (x)% that may only reflect a small portion of the market.

 

In North San Diego County, if one particular neighborhood has an increase of sales, it will affect the numbers of San Diego. The headlines can read, “Housing prices drop by 30%.” In reality, this may not reflect the entire market. If the lower end of the market is driven by foreclosures and high crime, those prices in that neighborhood can drop precipitously. If you change your home hunting prospects to an upscale neighborhood, one not controlled by foreclosures and high crime, prices may not be dropping.

 

I am not saying that home prices aren’t going down. What I am saying is that listening to the headlines or a ten second statement about the real estate market is not a good indicator of home prices.

 

Motivated sellers will also drive the market measurably. Whether foreclosure, unemployment, moving or even moving up in home size, when the seller is motivated to complete the sale they will negotiate with the buyer. But if sellers are able to hold on, wait for their market to go up, then prices should follow.