(real data from DC neighborhoods like Burleith, Georgetown, Berkeley, Hillandale, Glover Park and Foxhall Village)
If you’ve ever read a headline like “Home Prices Are Soaring!” or “Housing Market Crashes by 25%!” (real example from one month ag0), you might have wondered—what does that actually mean?
Are home values really changing that drastically? Or could it be that the numbers are misleading?
The truth is, most reports rely on median home prices, but that’s only half the story. To really understand what’s happening in the market, you need to know the difference between median and average home prices—and how they can be skewed by changes in the mix of homes being sold.
Let’s break it down in simple terms—and with some fun visuals (at least, fun to me… but I’m a nerd 🤷♀️)!
What Is the Median Home Price?
The median home price is the middle value when all homes sold in a given time period are lined up from lowest to highest.
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Half the homes sold for more, and half sold for less.
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The median is NOT affected by a few very high or very low sales.
What Is The Average Home Price?
The average home price is the total of all home prices divided by the number of sales.
Key Takeaways:
- The Median Home Price gives a more accurate picture of typical home values because it is not influenced by extreme highs or lows.
- The Average Home Price can be misleading in markets with luxury homes, as just a few very high-priced sales can skew the number upward.
How the Mix of Homes Sold Affects Prices
Imagine a simple fruit basket with apples ($1 each) and oranges ($2 each).
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If more apples are sold, the median price is $1.
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If more oranges are sold, the median price shifts to $2.
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But did the price of apples or oranges actually change? No.
🏡 The same thing happens in real estate! If one month sees more luxury home sales, the median price jumps, even if individual home values haven’t changed.
How Sales Mix Affects the Median Price
Real Market Example: January vs. February 2025
Let’s look at real MLS sales data for the Washington, DC zip code 20007 which is Burleith, Georgetown, Berkeley and Glover Park, Hillandale and Foxhall Village.
in January and February 2025.
🔹 January 2025:
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Median Sales Price: $1,449,500
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Average Sales Price: $1,991,136
🔸 February 2025:
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Median Sales Price: $1,167,000
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Average Sales Price: $1,512,273
(Based on actual MLS data from January & February 2025 for Georgetown DC)
Real Market Data: Median vs. Average Prices
Notice the difference?
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The median price dropped significantly. But does this mean homes actually lost value?
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The average price is much higher than the median, which tells us several high-end homes pulled the average up.
This is why blindly following median home prices can be misleading.
Why This Matters to Buyers and Sellers
If You’re Buying:
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Don’t panic if you see “prices rising.” if you see a big month to month change. Check what kinds of homes are selling.
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If the median price is going up, it could just mean more luxury homes are selling—not that prices for all homes are increasing.
If You’re Selling:
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A rising median price doesn’t automatically mean your home is worth more.
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It’s more important to compare your home to similar properties that actually sold.
Final Thoughts: What to Watch for in Market Reports
Next time you hear about home prices skyrocketing or crashing, remember:
- The median price is useful but can be skewed by changes in the mix of sales.
- The average price is easily influenced by a few expensive homes.
- The best way to understand the market is to compare similar homes—not just look at median or average numbers.
But another, most accurate way to track home price trends is by looking at year-over-year changes rather than month-to-month fluctuations. Both median and average home prices can swing significantly from one month to the next due to changes in the mix of homes sold. A year-over-year comparison smooths out these short-term variations, giving a clearer, more reliable picture of real estate market trends.
In today’s fast-changing real estate market, having a trusted real estate advisor is more crucial than ever. With expert insights, data-driven analysis, and market resources, you can make informed decisions and protect your biggest investment. Don’t navigate these turbulent times alone—get the guidance you need to buy or sell with confidence.
Thinking About Buying or Selling? Let’s Chat
Every home, every market, and every situation is unique. If you’re looking to buy or sell in Burleith, Georgetown, Berkeley, Hillandale, Glover Park and Foxhall Village and wondering what these trends really mean for your home purchase or sale, I’d love to help you make sense of it all. Feel free to reach out anytime—no pressure, just a conversation.
📩 Send me a message or schedule a quick call here: GOOGLE Calendar
