Historical Median Resale Home Prices

The limitations of the median home price to determine market value trends

MEDIAN PRICE

Many newspapers run stories about the median price dropping in a particular zip code of 25% or more. Does this really mean that your property dropped in value by that much? Probably not. One of the problems with today it that there are a large number of homes being sold in the lower range of values. That alone will mislead many into believing there home has lost that percentage of value.

Take an example of median price. Suppose that in any zip code you had 6 sales for month of January and six sales for month February.

     JAN.                  FEB.

$800,000          $900,000

$750,000          $850,000

$600,000          $400,000

$300,000          $350,000

$250,000          $300,000

$225,000          $300,000

The median number in the first column (January) is $600,000 and the median price in the second column (February) is $400,000. That is a 33% drop in price from January to February. Does this mean that every home in this zip code dropped by that amount? No, it does not. But newspapers, radio and TV will try and make you believe so. One way that using median price can make any sense is by looking at it over a period of time, such as several months or several years. Most importantly make a list of past sales that are comparable to your home in your neighborhood by each month. Determine the median price for each month. This method will give you a much better idea if your home value has been slipping. Do not look at sales all over the zip code. Most zip codes have a wide range of values. The homes in your neighborhood are the most important. One has to compare properties that are comparable to their home.