Every three months I provide my readers with some details about home prices in Maricopa County. That's the most populous county in Arizona, and where Phoenix, Tempe, Scottsdale, Glendale and many other major cities in Arizona are located. When I offer those home price comparisons of various communities, I provide both average prices and median prices. In another set of articles I discuss local salary rates for different career types and provide hourly median and average pay rates. What's the difference?
Median vs. AverageThe median of a set of numbers is that number where half the numbers are lower and half the numbers are higher. In the case of real estate, that means that the median is the price where half the homes sold that month were cheaper, and half were more expensive. The average of a set of numbers is the total of those numbers divided by the number of items in that set. The median and the average might be close and they might not. It all depends on the numbers.
Here are 11 fictional home prices.
The median price of these 11 homes is $105,000. Five homes were lower priced and five homes were higher priced.
The average price of these 11 homes is $498,000. That's what you get if you add up all those prices and divide by 11.
What a difference! When you are looking at home prices, make sure you know whether the numbers are averages or medians. Both numbers provide good information, but they have different implications.