Median price doesn’t measure home price gains, losses. What does?

masouds Las Vegas Homes and Condos Blog, Las Vegas Real Estate Market Analysis Blog Leave a Comment

One of the most significant errors made about housing market reports is that they mistake price per square foot ratio of sold homes with the median price.

 “Las Vegas home prices set record in June as sales rebound,” wrote Las Vegas Review-Journal on July 7th. The reason is that the median price of Las Vegas homes increased by $10,000 from May and reached $325,000, which is a new record. However, if you ask, what is the correlation between the median home price and home price gains and losses? They can’t answer it since the median price shows the market direction in lower price ranges, that is all.

Median is a mathematical term that indicates that one half of the group is higher and one half lower. The median price of 101 sold homes would be that price, which is lower than 50 of the prices and also higher than the other 50.

Median price of Las Vegas homes set a new record at $325,000 in June 2020

Las Vegas home prices gains or losses are measured through price per square foot ratio

To calculate home price appreciation or depreciation, we use the price per square foot ratio, which is calculated by dividing the sales price of a house with the square footage. The price per square foot of all homes sold is calculated the same way, but for all homes in a period of time, like a month or a year. This is the number that you should look at to decide whether or not home prices have gained or become lower.

Price per square foot of Las Vegas homes at $176 has been unchanged in the last 4 months

As for “Las Vegas home prices set a record in June as sales rebound,” it is only half right. The sales numbers have rebounded some. But the price per square foot of Las Vegas homes, which has been at $176, has been unchanged for the last four months. Now you see how Las Vegas homes did NOT set a record in June 2020. The correct wording for the LVRJ article should have been the median price of homes sets a new record and not home prices set a new record.

This is not fake news, it is uninformed news, resulting in the wrong decision by the buyers and their agents offering more than they should in an at best stagnant market.

If you want the most accurate analysis of Las Vegas housing market, get it here.

Median price doesn’t measure home price gains, losses. What does? was last modified: July 8th, 2020 by masouds

Leave a Reply