When you've been in the real estate game as long as I have, you realize that there's no such thing as an "average" home. You only need to have a quick browse through the properties we have here at Century 21 to demonstrate that. Just like people have had to adjust their ideas of what constitutes an 'average' family or an 'average' person, when it comes to property it's really quite a misleading term.
If you're in the market for a property, or even if you just have an interest in real estate, you would have noticed how prevalent use of the word 'average' is when it comes to describing properties and real estate trends. Statistics refer to average prices in particular, which isn't helpful when you're trying to understand the true value of a home.With this in mind, what is helpful is to base the value of a home on the selling prices in the neighbourhood. If you're considering selling your home, this is the best approach to take. For example, if five homes in a neighbourhood recently sold for $200,000, $220,000, $260,000, $290,000 and $500,000, the average price is $294,000. But when you look at the prices independently, it's obvious that the $500,000 sale has pushed the average higher than it should be. This is where use of average starts to mess things up. If you omit that sale, the average becomes $242,000 which is a more accurate indicator of the value of the homes in this fictional neighbourhood.
This type of skewing occurs frequently in home price surveys and makes its way into the public's eye when statistics are cited. It's no wonder people get confused. In a slower market like we're experiencing now, the statistics are subject to a further blip because higher priced homes don't sell as quickly as lower priced homes.
All this boils down to a realization that you can't and shouldn't rely on 'average' home prices to make sense of the selling climate where you live, or where you want to live. If you keep your eye on your own neighbourhood, or that of the one you want to move into, you've got a much better chance of seeing the real of homes.