What is "Median Price"?

We’ve seen a number of articles in the media of late referring to the “median price” of homes being up in the Naples area which can and have led many to believe that prices are increasing and/or sales are increasing. When in fact at this time the market is still in a correction phase with monthly activity down about 60% compared to year ago levels with prices continuing to move lower in many areas. I’ve seen many folks make decisions on this or other information that was not in their best interest so we want everyone to understand what “median price” means.

Very simply “median price” is the middle price of all the homes sold for a period of time, not the average price. To find the “median price”, the sold prices are sorted in order from highest to lowest and the sold price in the middle of the list is the “median price”. Now, why is the Naples “median price” increasing yet the market in general is still in a correction phase? Very simply the number of properties sold at lower price levels has decreased more than the number of properties sold at higher price levels thereby causing the “median price” to increase while prices are moving lower in many areas of the Naples market. While sales in all price ranges are slower, as a result of the speculative market correction, the lower half of the market has slowed more than the top half of the market.

The “median price” is not an indicator of market direction or activity and is of no value for the person looking at buying or selling. Median price is more a figure analysts prefer to use than average price but in a market like Naples where we have a very wide range in prices it’s of no value to the buyer or seller.

Prepared by: Don Hunt, Realtor