If you are seriously considering diving into the Arizona real estate industry, there are a few terms you should familiarize yourself with.
What Is The Median Price?
The term “median” refers to any statistical value that effectively separates a sample of data evenly into higher and lower halves. In the real estate industry the median house price is the middle point of all the properties sold over a specific period. Therefore, if the median price for 201 properties sold would be the price that is higher than 100 of them and also lower than 100 of them.
The mean price is also a commonly used statistic. Mean means average.
The main reasons why the median price is utilized and not the mean price are:
The median price more accurately reflects the nature of the sample size
It is generally more indicative of the overall status of the market.
As it relates to the real estate market, the median asking price gives buyers and sellers a generally accurate representation of the cost of certain types of properties in any designated location. Not only can it provide this statistical advantage, it also has the ability to give individuals an overall view of the performance of a specific area in recent years.
Nevertheless, it is worth noting that median prices are not a standalone means of judging the state of the market. Median prices are most useful whenever they are used in conjunction with other figures and facts; and compared and contrasted with other relevant data. This can include the average income ratio, unemployment rate, demand and the cost for goods and services in an area. But bear in mind that in some occasions the trends within a market cannot be accurately determined by using the median price.
The Problem With Using The Median
One of the most glaring problems of using the median price is that; it will be askew if greater numbers of less expensive or more expensive properties have been sold in a set period of time. For this reason, there are sometimes blatantly noticeable differences in an area’s median price on a monthly basis.
However, the issues that arise from making use of the median are easily rectified. As a simple corrective measure, it is almost always recommended that median prices are viewed over extended periods of time and that all trends are monitored meticulously.
What Is Going On In Arizona?
Just last year, the median asking price of housing units in Arizona was over 20% more than the national median asking price. This increase is not a chance occurrence. This growth is rooted in the rise of demand for residential property in the state.
The rise in the median price means that Arizona restate sellers are responding to the increase in property sales, which indicates that the market is strengthening. A decline in the median price would mean the opposite; fewer house being sold at the current asking price, forcing sellers to drop their prices.
This surge of growth is not only made up of able-bodied individuals who are instinctively looking for greener pastures, but also many other who have; examined, compared and contrasted the Arizona real estate market with the rest of the country.