Median vs. Average Home Prices

Written by Posted On Tuesday, 15 March 2016 10:36


March 2016 – For decades, the generally accepted method of tracking home prices is the median value.  It is a more stable indicator than the average value and less subject to volatility caused by price flyers.  It is significantly more representative of the true state of the market, and that is why it is used.


A price flyer is a home that sells for at least twice as much as the second highest sale price or less than half as much as the second lowest sale price.


It’s useful to compare the effect of a price flyer on a set of sale prices, using both the median and the average method.


Consider 5 homes sold as follows: 1. $297,000 2. $355,000 3. $421,000 4. $499,000 4. $575,000.  This is a short list and the values are relatively close and evenly spaced, so the effects will be magnified.


The Median is the #3 home, the center of mass of the list, $421,000. 


The Average is the sum of all 5 prices, divided by 5, $429,400.


If we toss in a high flyer at $1,500,000, nearly three times the previous high price, the median is now found by taking the average of the two middle prices, since the list is now an even number, while the average is the sum of all 6 prices divided by 6.


The Median is now $460,000, while the Average jumps to $607,833!


If we use a low flyer at $50,000, the Median drops to $388K and the Average plummets to $366,167.  If the flyer had been $100K, the Median would be the same at $388K, while the Average would have fallen less to $374,500.


Using the average to chart price data usually results in a lot more “noise”, or big swings in the reported number than using the median, and this is the main reason that the median value is much more widely used.  People who work with data want to minimize noise so trends can be clearly seen.


The table shows monthly SFR sales data for Nevada County for 2010, expressed as both Median and Average.  In every case, the Average is higher than the Median, and the variation between Median and Average for a given month varies widely, from about +$10K (3%, Mar 2010) to nearly +$100K (30%, July 2010).


The moral of the story is that Median prices are here to stay for a number of good reasons.  Occasionally, a discussion of home values using Average will be seen.  It’s a flyer.  The alert reader will not be misled into thinking there has been a big price jump since reading last month’s report!


Paul Sieving is a Realtor® with MacLeod Sierra Realty, a former Director and MLS Chair of NCAOR, Past President of the Nevada City Chamber of Commerce (2015) and Grass Valley Chamber (2004), and has served our community as a real estate professional for 17 years. Comments, questions and thoughts are welcome at This email address is being protected from spambots. You need JavaScript enabled to view it. or (530) 274-0906.


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Paul F Sieving


In Nevada County since 1998 and helping people realize their Nevada County Real Estate goals since 1999. A veteran of the Pharmaceutical and Software industries, he brings over 20 years of experience as a scientist, a marketer and an operations executive in these challenging business environments.



A graduate of the Nevada County Community Leadership Institute, Board Chair of the Grass Valley/Nevada County Chamber of Commerce in 2004, Officer of NCAOR for 2004-2006, and President of the Nevada City Chamber of commerce for 2015, Paul has become deeply involved in the community over the last several years.


Paul writes a monthly Real Estate column for the local media, and syndicates blog posts across the real estate media.


His colleagues at Nevada County Association of Realtors® have recognized Paul for his commitment to raising the bar of service for members and their clients. He received a Certificate of Appreciation for "outstanding service" as Chair of the MLS Committee in December 2004, and the NCAOR Community Service of the Year Award for 2004 for "for Promoting Integrity and Dedication to the Principles of Organized Real Estate". 


ØToday – 17 years as a Realtor® in Nevada County


ØYesterday – Dishwasher, busboy, bicycle and auto mechanic


ØStudent of Chemistry, standing on the shoulders of giants


ØUniversity of California San Diego, BS in Biochemistry, 1980


ØUniversity of California Berkeley, Graduate Coursework in Chemistry, 1980-81


Ø10 years in Chemistry and Pharmaceutical research in Sacramento and the Bay Area


Ø10 years in Technical Marketing and Operations Management


ØBringing it all to bear in serving your Real Estate needs


Serving his new and existing clients and referral base as he builds a diverse and well-rounded Real Estate practice, this has included transactions of residential, multifamily, land, commercial and industrial properties, with plenty of experience in distressed sales. 

Providing expert testimony on real estate matters in various legal proceedings.


Bringing you a level of business experience, community knowledge, and commitment to putting your goals first that’s hard to beat anywhere.

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