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Price Disparity Revealed when Comparing Sales Data

March 5, 2014  |  by Chris Sicks

As you know, there is a significant difference between median and average sales price data. That’s why MRIS reports both. Median price data gives you an idea of the overall affordability of an area. It is less volatile than average price data, which fluctuates more because it is easily swayed by a few very expensive sales.

Although median and average data tell us different things, comparing the two can actually give you an idea of the wealth disparity in an area. A big gap between the median and average sales prices means there are a lot of high-priced properties pushing up the average sales price.

Price Disparity ChartA good example of this is found in the District, where there is a huge difference between the value of homes in Georgetown and Anacostia, for instance. A much smaller gap, however, is found in counties like Stafford, Charles and Prince George’s. (See the “Price Disparity” chart.)

Here’s how it works: When you divide the average price of Stafford County homes sold in 2013 by the median price, you come up with 104. That is pretty close to 100, and if the average and median data were the same, the result would be exactly 100.

The conclusion we can draw from this is that Stafford County does not have as wide a variety of high- and low-priced homes as this District. In other words, there isn’t as much price disparity in Stafford.

The other extreme can be found in Montgomery County, the District and Baltimore City. These markets exhibited the greatest price disparity last year, which isn’t very surprising. Those three communities have neighborhoods with homes under $200,000, and others where homes cost over $2,000,000. That’s the very picture of disparity.

Interestingly, Alexandria is a very expensive place to live without as much disparity as you might expect. The ratio there is almost as low as bargain-priced Stafford County—but remember that we are looking at homes sold with this data. Alexandria has a larger rental market than Stafford, and that is not reflected in these numbers.

Remember that this data represents only one year. However, when I compared these figures to those from 2012, they were often the same, or just a little different.

Posted in Blog, Featured, Market Statistics

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One response to “Price Disparity Revealed when Comparing Sales Data”

  1. debrasamuels1 says:

    Thx for the info!

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