Before you start shopping for a new house, it’s a good idea to understand some of the terms you may encounter. One of the top issues all new homeowners deal with is figuring out how much they can afford to spend on a house. Along with the budget, you have to figure out how to balance the location and the type of house you plan to buy.
As you start to take this journey, you will encounter several terms you may not understand. Often, those in the real estate industry will speak about media sales prices and average sales prices. While these may seem like they are the same, they are not, and you should understand the differences.
What is the Median Sales Price?
If you remember back to your grade school math classes, you might recall learning about the median. It’s the figure found in a group of numbers right in the middle. All the other numbers are either higher or lower and it falls directly in the middle.
For example, if you have five homes prices ($180K, $200K, $250K, $275K, $350K, and $500K) the median is the one in the middle. In this case, it’s $250K. This is due to the fact that both $180K and $200K are lower, while $350K and $500K are higher.
What is the Average Sales Price?
The average sales price is probably a bit more familiar as we see more averages in normal, everyday life than we do medians. The average is simply all the prices of the homes added up and divided by the number of homes.
Using the same five prices above, the average is the total cost of all five houses ($1,755,000) divided by the number of houses (5), which equals $351K. This is quite different than the median sales price of $250K.
What’s This Mean?
When looking at real estate, both the median sales price and the average sales price are important, but they mean different things. For example, if the average sales price happens to be higher than the median sales price in a specific area for the same time period, the area likely has higher-priced homes.
In most circumstances, the median sales price will be the most useful number for a neighborhood. This is due to the fact that the average sales price can easily be skewed by one very high or one very low sale.
It’s best to understand these two terms and other common terms if you’re planning to start looking for homes for sale in Mint Hill, NC. With knowledge of the average sales prices and the median sales price, it will be a bit easier to make an informed decision about a specific neighborhood.
I would love to be part of your journey when the time is right for you. If you ever have a real estate question or need, or know someone who does, trust that you can turn to me. I will help you make the right move! Anna Granger 704-650-5707 |annagrangerhomes@gmail.com.
