Do you want to keep up with Hampton Roads market trends but find some metrics challenging to understand? Real Estate Information Network Inc. (REIN) has served the Hampton Roads region for more than 50 years as the region's Multiple Listing Service. It not only houses and displays all information about homes for sale, but it also provides statistics and market trends to real estate professionals in Virginia and beyond.
You may have even used REIN’s public data to track trends in areas of interest to help you make the best buying or selling decision. Most metrics you will find available on REIN.com are pretty straightforward, but you may find yourself scratching your head on more complex data values like median sales price. The rise and fall of home prices are always a hot topic in the industry. Here’s how you can better understand this figure and use it to understand market conditions.
In a list of sales arranged in numerical order, the median sales price is the transaction that sits at the center of the list. For example, if you have a total of five homes sold in a given time period, and you list them from most to least expensive (or least to most), the home in the middle, number three, would represent the median sales price. You could have homes ranging from $1,000,000 to $40,000. Wherever your middle lands on your list indicates the activity of homes in the area you are searching.
By using median sales price, you eliminate outliers that could severely skew the data and the actual activity of the market. In a market like Hampton Roads, it’s common to have luxury waterfront homes find their way into the data. Using average sales price as your metric, in this particular example, could cause your data to be higher than what’s actually selling in the market. Let’s take a look at these five home prices.
House 1: $40,000
House 2: $150,000
House 3: $175,000
House 4: $300,000
House 5: $2,000,000
The average home price here is $533,000, while the median home price is $175,000. There’s a big difference, right? This list has two significant outliers on both its low and high end, making the average figure not as useful when compared to the median.
Again, when looking at the median sales price, you’re looking at a representation of the activity of the market. You are not looking at an indicator of an individual home’s value. Evaluating median sales price over longer periods of time, such as year-over-year, will give you the best insight into where market conditions are headed. An increase year-over-year could indicate a growing and healthy market and possible increases in property values. A significant drop could indicate an unhealthy market and possible problems in the overall economy. Either way, this isn’t a metric you want to make decisions on based on week-to-week comparisons or a very short list of transactions. This could cause the data to be invalid.
If you’re still unsure of how to use median sales price to your advantage, it’s always best to work with an agent. Your agent is an expert in tracking and analyzing market trends and can explain all metrics you may come across in your buying or selling journey. Connect with one of more than 9,000 agents to help you navigate the process. Consider working with someone who is experienced in this specific kind of sale. Ready to buy but not sure what you can afford? Check out the mortgage calculator to help estimate possible monthly payments. Download the REIN.com app and put the power of fresh and accurate listing data in the palm of your hand. The app is available free in the App Store and Google Play Store. For local listings you can trust, start with REIN.com.
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