Median Price - per room?

[trinity168]

Hi,

Is there such a thing, or do I have the definition of median price all wrong? I have PF subscription, would the median price of a report such as PF, indicate the "usual" number of rooms in the suburb, and that is the basis of calculation of the median price?

E.g. Median Price for Units in Port Macquarie, NSW is $270K. If the normal dwelling is 2 bedrooms, thereby, 270K is most likely for 2 BR unit?


Thanks.

 

[Propertunity]

No, the number of rooms has nothing to do with the median. The median is just the numerical midpoint where 1/2 the houses sell below and 1/2 the houses sell above.

Also bear in mind that the unit figures include all strata properties including t/houses and vilas.

 

[trinity168]

Thanks Propertunity.

Is it fair to say that the median price can be misleading?
E.g. Port Macquarie Median Price Unit - $270K. But, to really know a good price of a 2BR, you look at all the properties on the market, and get a general gauge? This is a simpler process if there was quite a bit of properties in the market, but, what if the suburb selected is smaller and, there is not a lot to compare with?

Thanks!

 

[Peter_Tersteeg]

"median" is a statistical expression. It basically defines the middle of a data set. It is different from the statistical definition of "average". It's generally used instead of "average" in statistics because it tends to ignore the extreme ends of the data set.

Odds are, the house you're looking at is not the median house for that suburb. It might be larger or smaller, in a better or worse location, be in better or worse condition.

It's useful in terms of a general comparison of what's average and what's not, but it can be very misleading.

 

[Scott No Mates]

To add to Peter's post, the median can be more misleading where there has been a lot of new units hit the market shifting the median higher. If you go back to basics, sift through all of the comparable sales, then a modal range might be more apt ie the most occurring price within say +/- 5%.

 

[trinity168]

Thanks Peter & Scott!

 

[Propertunity]

This post I made on medians, back 5 years ago, might help:
http://somersoft.com/forums/showthread.php?t=48346

Cheers,
Alan