The median selling price represents the mid point sales price. Half of the properties would be above that point and half would be under.
Each area would have a different median sales price for example: West Hollywood median price for 08 $1,020,000 but, the median sales price for the main areas in Los Angeles was $530,000 for 08.
The disparity you may be seeing has to do more with the fact that the fastest selling homes at the moment are under $600,000. The number of sales per year have increased since 07 mostly in this price range.