The median price might be more useful. The number of properties that sold for more than the median price is the same as the number of properties that sold below the median price. Another way to look at this would be to list all sale prices in order from high to low. The price in the middle of the list is the median.
In July, the average sale price of all single family houses, manufactured homes, condos and townhouses in Tucson was $173,141. The median sale price of all types of homes was $125,000. Big difference. This indicates the most of the sales are occuring in the lower price ranges.
The average July sale price of single family homes in Tucson was $185,492 and the median was $134,945.
These data came from http://www.tucsonrealtors.org/tar-v2/statsJuly2011.pdf
So, how do you use this information to compare neighborhoods and make an offer? First, it's important to know whether you are looking at average and median list prices or sale prices. The sale prices willl be lower, and they are the only meaningful prices. The price for which a seller wants to sell his property is the wish or the dream. What a qualified buyer is willing to pay is the the reality, and it's the basis for determining how much to offer for a nearby property.
The only thing you can determine from the average and median sale prices is that recenlty, the properties in some neighborhoods have sold for more than they have in another neighborhood. This doesn't mean that in general, the properties in one neighborhood are worth more than the properties in another neighborhood. The prices in one neighborhod may be temporarily inflated by the recent sales of several of newly renovated properties. The prices in another neighborhood may be temporarily deflated by the recent sale of a number of foreclosures and short sales. And unless the property is in a newer subdivision where every house is the same size, and in the same condition, and sold under the same terms (no such place exists, by the way), the average and median sales prices tell you nothing about the value of any particular house.
It's more important to look at the sale price in terms of dollars per square foot. While this still doesn't tell you what a property is worth, it's a starting place for evaluating a 1,600 square foot fixer-upper sold as a short sale to the 1,200 square foot, newly-renovated house next door owned free and clear by an investor.
In other words, determining what a house is worth is not a simple matter. There are many factors to consider.
You can track median sales prices across neighborhoods to tell you what's happening in that area. If median prices are dropping, it means more homes in lower price range are selling. If the median sales price is increasing, it means more sales at the higher end are happening. That's why I like median sales as a trend evaluator more than the average. A few very low or very high sales prices can skew the average. The median is a more robust number. It's the point at which there are an equal number of sales above and below it, eliminating the chance of a misjudgement.
You don't mention if you're working with a Realtor, but a good Realtor can help you with those evaulations and many other factors you may not think to consider. And it won't cost you a penny.
I'd be happy to refer you to a few I think very highly of as buyer's agents.
Good Luck, Catherine
One foreclosure in an area will not impact values dramatically. Appraisers need to use a minimum of 3 comparables, but most areas do have foreclosures and short sales, it is now a large percentage of the market and accordingly, are included in the comps on appraisals.
And to everyone who suggests asking a Realtor, well um, yeah. I already have one, but I have a brain, too. His role is to guide me and pull the trigger on the paperwork, but I like to do my own research. In fact, I know some neighborhoods better than he does.
In a neighborhood with a mixture of custom and tract homes with wide variances in value, the median price might be a better estimate of value. The reason, some of the custom larger homes may swing the average. Unless of course you are consdering one of the more expensive homes. Then you want to evaluate on a more selective basis and not just neighborhood values.
The median and average works the best in a neighborhood buillt by one builder with a few models.
Arizona Homes and Land
With my clients, we look at average price per square foot and adjust as necessary from there - not much different than what you'll see an appraiser do.
We recommend doing your own research with the support of your agent and arriving at your own price point before even considering the average or median sale prices. This information can be weighted one way or the other by inappropriate comps and should be used only as a mild reference.
Arriving at your own information will better prepare you for being able to make an offer that is an accurate reflection of the local real estate market and make you better prepared to defend it.
Crunch your own numbers....you may be happy you did!
Knowing the average sales price is not really useful at all. Three big sales of $10M each can move the average more than thirty sales of $25,000 each. Knowing the median sales price is only useful if we know where the property falls in the median - if it is, say, in the 70th percentile, knowing the median may helpful, but maybe not helpful enough.
You should know that no professional in real estate uses the average or median sales price to either compare neighborhoods or to make an offer.
All the best,
Price of the individual property can only be estimated by CMA performed by a realtor and verified by appraiser. If there is significant difference between CMA and appraisal - ask your realtor to explain it. Same thing goes for sale prices asked by a seller. Prices can be higher that market value justifies (by insistence of the owner) or unreasonably low (often in short sale - agent wants offers).
You may read my earlier post related to finding open houses http://www.trulia.com/blog/george_szkup/2011/05/tucson_real_
George in Tucson