Jeff’s Carlsbad Blog for First Time Home Buyers


Beware of Median Prices

Posted in Financial,House Hunting by Jeff Dowler on October 11, 2007

The real estate industry, and everyone who reports statistics on the housing market, use MEDIAN PRICES as a basis of comparison – how the market is doing now as compared to a prior time frame, for comparing different towns, and so on. The median is the point at which 50% of the homes sold for more money (or less).

While the median price is useful information, you must be careful to not place too much stock in what it is telling you. It will shift each month, potentially, as the sales do (lots of high end or low end sales may shift the median). The MLS reports sales once they have closed escrow (as they say here in CA) or once settlement has occurred. However this is often 1 to as much as 3 months after the home originally came off the market when a contract was first accepted.

Why is this important?

If it is reported that the median price of a home in Carlsbad, for example, is $X, that data actually may underestimate (if the market is rising) or overestimate (if the market is falling as it is in many places) the actual situation since the data are based on homes that “sold (went under contract) 1-3 months ago.

This is NOT to say you should not pay some attention to this information. Just don’t rely on it other than as a indicator of current trends.

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