New to Real Estate · NY · Member since 2025 · 5 posts · 2 votes
Hello BiggerPockets community! Just starting my journey into real estate investing, and conducting my first market analyses. One datapoint I keep getting a little hung up on = is average home value, and it's leading to two separate but related questions: how do I most effectively use or weigh this metric as part of my analysis? And I understand the difference between the average home value and median sold price, but I'm curious which people use when evaluating a market, their rationale for that decision, and how they use the metric. Thanks so much in advance for any answers!
Real Estate Broker · Boone, NC · Member since 2024 · 82 posts · 55 votes
1y
Welcome to BP, I personally think median sold price is the better metric. It’s not distorted by extreme highs or lows like average home value can be. I use it to track price trends, compare to median income (affordability), and check rent-to-price ratios for cash flow.
Real Estate Broker · Boone, NC · Member since 2024 · 82 posts · 55 votes
1y
Welcome to BP, I personally think median sold price is the better metric. It’s not distorted by extreme highs or lows like average home value can be. I use it to track price trends, compare to median income (affordability), and check rent-to-price ratios for cash flow.
Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes
1y
Hey, welcome to the real estate world! You're asking a really good and important question early on, which is awesome.
So when it comes to average home value versus median sold price, here's the simple way to look at it: the average can get really thrown off by super expensive homes or really cheap ones. If a $10 million house sells in a neighborhood where most houses are $300K, the average number gets dragged way up and doesn’t really show the “normal” situation. That’s why most investors and analysts prefer to use the median — because it shows the middle point. Half the homes sell for more, half sell for less. It gives a cleaner, more accurate picture of what’s typical.
Now, how you use them: Median sold price is better when you're trying to understand the general affordability of an area or if you're comparing it to incomes, rents, or cost of living. It's great for spotting trends too — like if the median is climbing fast, you know prices are heating up. The average can still be helpful if you're in a luxury market or if you're specifically targeting very high-end properties, but for 90% of regular investing strategies (BRRRR, flips, rentals), median is the move.
When you’re doing your market analysis, I’d recommend mostly weighing the median price — but still glancing at the average just to catch if the market has weird pricing swings or outliers. Helps you catch weird patterns early.
Are you thinking about doing your first deal locally or out of state?
Hey, welcome to the real estate world! You're asking a really good and important question early on, which is awesome.
So when it comes to average home value versus median sold price, here's the simple way to look at it: the average can get really thrown off by super expensive homes or really cheap ones. If a $10 million house sells in a neighborhood where most houses are $300K, the average number gets dragged way up and doesn’t really show the “normal” situation. That’s why most investors and analysts prefer to use the median — because it shows the middle point. Half the homes sell for more, half sell for less. It gives a cleaner, more accurate picture of what’s typical.
Now, how you use them: Median sold price is better when you're trying to understand the general affordability of an area or if you're comparing it to incomes, rents, or cost of living. It's great for spotting trends too — like if the median is climbing fast, you know prices are heating up. The average can still be helpful if you're in a luxury market or if you're specifically targeting very high-end properties, but for 90% of regular investing strategies (BRRRR, flips, rentals), median is the move.
When you’re doing your market analysis, I’d recommend mostly weighing the median price — but still glancing at the average just to catch if the market has weird pricing swings or outliers. Helps you catch weird patterns early.
Are you thinking about doing your first deal locally or out of state?
Thanks so much @Mohammed Rahman — really appreciate you taking the time for such a thoughtful reply. I'm leaning toward out of state for my first deal, since prices in the local New York area seem to be prohibitive with my starting capital and to my strategy (long term rentals ideally in multi-family with value add opportunities)