Median vs. Average: What Is The Difference? 8 Facts

One of the most important things to think about when looking for a home is how much you can afford and how you will balance that with the type of property you want in the best location for you.

Real estate sites online and real estate salespeople often use the terms “average prices” and “median prices” to compare prices in different places, which can be confusing.

Maricopa County is home to Phoenix, Tempe, Scottsdale, Glendale, and other cities in Arizona. It is the most populous county in Arizona and the fourth largest in the United States.

What Is Median?

The median is the number that divides the top and bottom halves of a group of numbers. In other words, the value is between the largest and smallest values in a data set.

Median vs. Average

The median is often used as a measure of central tendency because it is not affected by outliers (extreme values that are far from the rest of the data).

What Is Average?

The average is the arithmetic mean of a group of numbers, which is most often the arithmetic mean of a set of observations.

It is the sum of the numbers in the set divided by the number of pieces in the set. The arithmetic mean of a set of numbers, x1, x2,… xn, is denoted by the letter x, and it is found in the following way:

x̄ = (x1 + x2 + … + xn)/n.

Differences Between Median And Average

MedianAverage
DefinitionThe median is the middle value that separates the lower and higher halves of a number set.The average is the arithmetic mean of a number set.
UsesThe median finds the central tendency of a skewed distribution.The average finds the central tendency of a normal distribution.
CalculationList the numbers in order and find the number in the middle.Add up all the values and divide the sum by the total number of values.
Example:
Normal distribution
2, 3, 3, 5, 8, 10, 11
median = 5
2, 3, 3, 5, 8, 10, 11
(2+3+3+5+8+10+11)/7 = 6
Example:
Skewed distribution
2, 2, 3, 35, 7, 8, 130
(3+5)/2 = 4
2, 2, 3, 3, 5, 7, 8, 130
(2+2+3+3+5+7+8+130)/8 = 20

Median vs. Average: Example

The middle number in a set of numbers is the one where half are lower and half are higher. In real estate, the median price is the point where half of the properties sold in a given location that month were cheaper and half were more expensive.

The average is found by taking the sum of a group of numbers and dividing it by the number of numbers in that group. The median and the average may be the same or very different. All that matters are the numbers.

Here is a good example. Think about the following 11 possible home prices:

  1. $100,000
  2. $101,000
  3. $102,000
  4. $103,000
  5. $104,000
  6. $105,000
  7. $106,000
  8. $107,000
  9. $650,000
  10. $1 million
  11. $3 million

The middle price of these 11 homes is $105,000. This is because the prices of five homes were lower and the prices of five homes were higher.

In the meantime, these 11 homes cost an average of $498,000. When you add up all of those costs and divide by 11, you get that number. It’s a big difference from the median.

Make sure you know if the prices of recently sold homes are medians or averages when you look at them. Both numbers are helpful, but their effects are different.

If the average price in a certain area is higher than the median price for the same time period, it means that the area has a lot of homes with much higher prices, even if sales in the lower price range were strong during that time period.

Median vs. Average Similarities

  • 50 to 50 is the range of numbers that fall in the middle of the group.
  • The middle number in a set of numbers is 50, which is the median.
  • The lowest number is 19, because 19 is the lowest.

Median vs. Average Pros and Cons

Median Pros & Cons

Median Pros

  • Less is changed by outliers when it comes to the median.
  • Quantiles and probabilities are not used in the median.
  • The median is a great choice for distributions that are very uneven.
  • It’s easy to use the median.
  • The outliers can’t change the median.

Median vs. Average

Median Cons

  • Median price can be misleading
  • The median home price is compared to homes of comparable size, location, and construction
  • The median price fluctuates significantly from season to season.
  • The median home price doesn’t consider sales to first-time homebuyers

Average Pros & Cons

Average Pros

  • Easy to find out, you just add up the figures in the set and divide it by the total count of figures in the set

Average Cons

  • The Average is more affected by outliers

Conclusion

The average is the sum of all the numbers divided by the number of numbers. The middle number is the median. It is half of the first number and half of the second number. In the United States, the average household income is $52,851, and the median wage is $31,660.

Leave a Comment