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Byline – John Ford Boston Beacon Hill Condo Broker 137 Charles St. Boston, MA 02114

What’s the median price of a Beacon Hill condo?

What’s the median price of a Beacon Hill condo?

The National Association of Realtors (NAR) will release its latest Existing Home Sales (EHS) report later this week. This monthly report provides information on the sales volume and price trend for previously owned homes. In the upcoming release, it’ll likely say home prices are down. This may feel a bit confusing, especially if you’ve been following along and seeing the blogs saying that home prices have bottomed out and turned a corner.

So, why will this likely say home prices are falling when so many other price reports say they’re going back up? It all depends on the methodology of each report. NAR reports on the median sales price, while some other sources use repeat sales prices. Here’s how those approaches differ.

The Center for Real Estate Studies at Wichita State University explains median prices like this:

The median sale price measures the ‘middle’ price of homes that sold, meaning that half of the homes sold for a higher price and half sold for less . . . For example, if more lower-priced homes have sold recently, the median sale price would decline (because the “middle” home is now a lower-priced home), even if the value of each individual home is rising.”

Investopedia helps define what a repeat sales approach means:

Repeat-sales methods calculate changes in home prices based on sales of the same property, thereby avoiding the problem of trying to account for price differences in homes with varying characteristics.”

The Challenge with the Median Sales Price Today

As the quotes above say, the approaches can tell different stories. That’s why median price data (like EHS) may say prices are down, even though the vast majority of the repeat sales reports show prices are appreciating again.

Bill McBride, Author of the Calculated Risk blog, sums the difference up like this:

“Median prices are distorted by the mix and repeat sales indexes like Case-Shiller and FHFA are probably better for measuring prices.”

To drive this point home, here’s a simple explanation of median value (see visual below). Let’s say you have three coins in your pocket, and you decide to line them up according to their value from low to high. If you have one nickel and two dimes, the median value (the middle one) is 10 cents. If you have two nickels and one dime, the median value is now five cents.

20230620 how median price works

In both cases, a nickel is still worth five cents and a dime is still worth 10 cents. The value of each coin didn’t change.

That’s why using the median home price as a gauge of what’s happening with home values isn’t worthwhile right now. Most buyers look at home prices as a starting point to determine if they match their budgets. But, most people buy homes based on the monthly mortgage payment they can afford, not just the price of the house. When mortgage rates are higher, you may have to buy a less expensive home to keep your monthly housing expense affordable. A greater number of ‘less-expensive’ houses are selling right now for this exact reason, and that’s causing the median price to decline. But that doesn’t mean any single house lost value. 

When you see the stories in the media that prices are falling later this week, remember the coins. Just because the median price changes, it doesn’t mean home prices are falling. What it means is the mix of homes being sold is being impacted by affordability and current mortgage rates.

Bottom Line

For a more in-depth understanding of home price trends and reports, let’s connect.


the answer $735,000 based on last 6 months of 2018 MLS data.

But what exactly is that number? Here is simplified math example on median pricing. Say that in the Month of December 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 math teacher who was a math teacher for over 30 years before passing away.

More understanding of it

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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