Friday, April 01, 2011

Each week the Williamson County Association of REALTORS provides weekly and monthly statistics on sold homes in Williamson County to its members.  These stats provide members a snapshot of homes that have recently sold and provides WCAOR members an invaluable tool for their business.  

This tool is only useful if it is interpreted correctly.  Lets take a look at some sample statistics and learn what is behind them.  The sample stats below show the average, median, high and low weekly values for:

• list prices
• sold prices
• % difference of list price to sold price
• days on market
• as well as the number of homes sold that week.

To understand how to interpret these stats, it is important to see the data that they are derived from.  The sample data below is what these sample stats were complied from.  As you can see there are 5 homes listed in the sample data: 1 Main Street, 2 Main Street, etc...  The sample data also shows us:

• Square Footage
• $ per Square Foot
• List Price, Sold Price
• % difference of List Price vs. Sold Price
• how many the days home was on the market before it sold or DOM

It also has some information not used for the stats:

• MLS#
• Area
• Address

Average (mean)

We'll first look at the Average Row.  Each of the averages or "means" are computed by adding their corresponding column and dividing that sum by the number of homes sold.  (In this sample the number of homes sold is 5). 

So, to get the average List Price, take the sum of $134,000 + $154,900 + $164,000 + $168,000 + $199,000 = $819,900.  Then divide that total by the number of homes sold that week, 5.

$819,900 / 5 = $163,980.

Median

Next we'll look at the Median Row.  Why even look at the median?  A median is the middle of a distribution: half the values are above the median and half are below the median. The median is less sensitive to extreme values than the "average/mean" and this makes it a better measure than the mean for highly skewed distributions, such as a $1,000,000+ home thrown in with several $175,000 homes. 

To find the median sold price from the example data provided, simply put the 5 sold prices in order from lowest to highest and the value in the middle is the median value.  $130,000, $155,000, $157,000, $165,000, $178,200.  The median is $157,000.

*If there are an even number of values the average mean of the middle two values are added is used.

High / Low

Lastly, let's look at the High and Low rows.  These rows provide a basis for the median value.  To obtain the high value, put all of the values in ascending order and take the highest value.  The Low value works the same way, but you take the lowest value from the ascending order instead. 

So, to find the High value of the % Difference, put all of the % Difference values in order from lowest to highest and take the highest value.  89.5%, 95.7%, 97.0%, 98.2%, 100.1%.  The high value is 100.1%.  A high value of over 100% tells us that at least one home sold for more than its asking price in that particular week.