In Q1 (January 1 – March 31) of 2016, 18 homes sold in the Isle of Hope and Dutch Island area, prices ranged from $193,110 to $2.6 million. Wow. That’s a pretty big gap and that’s why I’d like to talk about why I think median prices are a more useful measure than average prices. I admit it. I love math, statistics and economics and am a numbers geek, but if you weren’t a big math person back in the day you may have forgotten what median even means.
Well here’s how it works. Let’s make it “real world” by using the actual prices of all the houses that sold in our area. If you want to find the average sales price, just add all the selling prices together and divide by the number of homes sold. In this case the total price of all homes sold was $9,192,762. If you divide that by 18 you get an average selling price of $510,709. Here’s the problem. There’s a huge outlier in the sales. A house on Grimball River Road sold by Keller Williams for $2.6 million, $1.9 million more than the next most expensive home. One extremely high or low price can skew the average selling price.
On the other hand, the median (which means “middle”) home price is literally the one in the middle. So if you have 5 sales, half of the homes (or two) would sell for more than the median and half of the homes (two) would sell for less than it. Pretty easy right? But, it gets a little trickier when you have an even number of home sales, like we did in Q1 of 2016. priced at $372,000 and $410,00 which equals $782,000. Divide that by two and (presto!) you get a median sold value of $391,000 for the quarter. This is a much better indicator of home values in the Dutch Island and Isle of Hope Area than the average selling price of $510,709. (Plus, you now have a way to sound really smart at the pool this summer. Wicked smart!)
Ok, let’s move onto a few more relevant real estate statistics as we get ready for Spring and Summer which are typically the hottest real estate seasons of the year. Here is how the Isle of Hope and Dutch Island market looks as of April 4. There are 43 homes for sale, ranging from $224,900 to $2.25 million.
The average list price is $530,593, while the median list price is $448,500.Ten homes are also active contingent (meaning the home seller has an offer, but the buyer still has to meet certain conditions). In addition, four more homes are under contract, but the sales have not closed yet.
As my old economic professor used to say: “There are Lies, Damn Lies and Statistics.” That’s why it’s important to use a real estate professional who knows what the “numbers” are really saying when you invest your hard earned money in a house or investment property.
If you’d like a more exact breakdown of the value of your home or the homes in your specific neighborhood or category, feel free to call me anytime 912-844-9000 or shoot an email to [email protected].
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