Understanding What A Median Price Is

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I know you’re not supposed to end a sentence with a word like “is” or “of” but it was just the headline. Now that we got that cleared up… The Median Home price for San Diego is down 20% from the 2005 peak. Notice the ominous bold letters that are italicised for effect. It’s a big number. But what exactly is that number? Here is the math on median pricing. Say that in the Month of May five homes are sold. One home is sold for 1 million dollars. The other four homes are sold for two hundred fifty thousand dollars. That would be a grand total of 2 million dollars in sales for the month. Averaging out to Four hundred thousand per transaction.

There is your median.

That 1 million dollar home isn’t all of the sudden only worth $400K. It’s a million dollar home. The $250K home hasn’t shot up to $400K either. It is the average, the median, for what the homes sold for. Take number of homes (x) divided into total sales amount (y) and that will equal the median (z). That was paying homage to my father who was a math teacher for over 30 years.

More understanding of it. What is the other translation of the median price? It reflects what is being bought and who is buying. The lower the price typically reflects the first time or entry level buyers. This should not come with any sort of status stigma. Being a first time buyer doesn’t make someone less of a person compared to the seasoned investor or move up buyer. This is the time for the big CONGRATULATIONS on getting your first home and doing it in a time when you were in control of the process! Way to go! Let there be no hating! Also, we are seeing fewer move up buyers at this time because in order to do so they would have to sell their existing house and we know how that is going right now. The higher end of the market, the million plus range, is still moving as well. These are buyers with means to do so. Most of those transactions are done in cash.

Current homeowners, ride it out. Sit tight and enjoy your home for now. First time buyers, it’s trigger pulling time! Giddyap!

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