Why Median Sales Price Offers Better Insight Into Market Trends

In the realm of real estate analysis, the median sales price is often preferred by analysts due to its robustness in handling data of varying quality and its ability to ignore extreme values at both ends of the spectrum. Despite the relatively small number of transactions in the luxury market, these high-end properties do not significantly influence the median sales price. However, they do impact the average sales price and the average price per square foot significantly. Large transactions within the luxury market can skew these averages higher, demonstrating the distinct behavior of different market segments.

To gain a clearer picture of these market dynamics, it's crucial to consider all recorded transactions, not just those closed through the Multiple Listing Service (MLS). By applying various data filters, we can observe distinct trends across different segments of the market. For instance, as of April 2024, the overall median sales price shows a rising trend since February 2023, yet it hasn't surpassed the peak of $470,000 seen in May and June of 2022, standing at $456,995.

Focusing on specific areas reveals more nuances. In the Northeast Valley, encompassing regions like Scottsdale and Fountain Hills, the median sales price reached a new high of $879,500 in April 2024, up from a low of $730,000 in January 2023. Conversely, on the fringes of the Valley, in places like Buckeye and Maricopa, the median sales price has only seen marginal increases, highlighting a slower recovery and a longer path to reaching previous highs.

It is also important to note that public record data, while complete and accurate, tends to lag, making the numbers less timely compared to other sources. This underlines why such data from April might be used rather than more current data from May. Additionally, when narrowing the focus to single-family homes, all median prices tend to shift higher, though the comparative dynamics between different areas remain consistent. Such detailed examination helps in understanding the varied and complex landscape of real estate markets, emphasizing the importance of using comprehensive data sets for analysis.

It is important to keep an eye on each city you are interested in buying or selling as no two cities a alike right now. Certain areas get hot and then cool quickly while others pick up the momentum. See the city graph in the 2nd graph below and you will get a great visual of what I mean! 

“A genius is often merely a talented person who has done all of his or her homework.”
– Thomas Edison

Have a great week everyone!