- Median
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The center value of an ordered set of data. For a set of five homes worth $100,000, $150,000, $200,000, $250,000 and $600,000, the median value would be $200,000 and the average value would be $260,000. When looking at a neighborhood's home prices, the median price is usually the best reflection of a typical price since it won't be affected by a few very expensive or cheap homes in the sample.
On Redfin, we use both averages and medians. We average all data points when calculating the ratio of the final sale price to the list price for a neighborhood because most home-buyers want to take into account every value, even outliers. But we calculate the median $/sq. ft. for homes in an area so that a few fixer-uppers or gold-plated palaces don't distract us from the price of a typical home.
Last Modified Friday, January 7, 2011