Question

When speaking of the housing market the measure of central tendency that is used is the median. Why do you think that is the case? Do you think it is the best choice for both the buyer and the seller? Would you suggest a different measure be used and if so why?

Answer 1

Generally Median is a better indicator than the average when dealing with property prices.

The median is the middle point that divides a series into two equal parts. In our case, the median price allows us to divide all transactions into two equal parts that is 50% of transactions occur at a price which is lower than the median price and the other 50% occur at a price that is higher. For example, a median price of $100,000 indicates that 50% of properties sold for less than $100,000 and the other 50% sold for more.

Yes I think its the best choice for buyers as median's advantage as a measure of central tendency is that it is not adversely influenced by extreme numbers as buyers can't be deceived with inflated average price numbers.

It's not a pocket friendly approach for seller,as the seller's might loose out on some prospective deals but it is an ethical way of presenting the data to their buyers.