Median vs. Mean Home Price

The median home price in your area has increased in the last 10 years, how does this differ from the mean home price in your area?

Well technically speaking, the median (exact middle) home price is the 50th percentile and the mean (sum/x = mean) is the average home price. As I understand it, central tendency can be illustrated through both the mean and the median, depending on the normality/skew of the sample. For instance, in the abovementioned case if all the houses were about the same price ($100,000 – $200, 000) and then there was one house that was in the millions the graph would be skewed. In this case, the average would be artificially high because of the million-dollar house, so we would probably want to use the median as a better example of central tendency. Another good indicator of which type of central tendency to consider would be the standard deviation. If the standard deviation, how the scores stand in relation to the mean, is too high the median score is preferable to the mean score. That is because the standard deviation describes the average variation of the scores from the mean. If the standard deviant is too high, that means that the scores vary greatly from the mean score. In that case, the median would be a more accurate indication of central tendency.   

References

Aron, A., Aron, E., & Coups, E. (2006). Statistics for psychology (4th ed.). Upper Saddle River, NJ: Pearson/Allyn Bacon.

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