Pricing

There are two major ways in which home prices in an area are recorded - the median and mean (average) home prices. Prices are also calculated by square foot, using both the mean and median price. Overall real estate prices have also had a profound impact on the urban as well as suburban and rural landscape.

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Median home price

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Willowood Town homes in Salinas, CA. With a median home price of roughly $620,000, Salinas is one of the most expensive cities in the United States. The median home price is the threshold which divides the real estate market into two equal halfes in reference to pricing. One half of all homes in the market are priced above the median home price, while the other half are priced below it. For example the median home price in the United States was determined to be $213,900 in the fourth quarter of 2005. Meaning that half of all homes in the US were priced above $213,900 and half were priced below $213,900. In California the median home price was determined to be $548,000, meaning that half of all homes in the state of California were priced above $548,000 and half were priced below this threshold.

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The median home price is one of the most common measurements used to compare real estate prices to different markets, areas, and periods. The median home price is often said to be less biased than the average since it is not as heavily influenced by the top 2% of homes. For example the average home price in the US was $264,000 in October 2005, compared with a median home price of $213,900 for the same time period.

Mean (average) home price

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The mean home price, or average home price is the sum of all home prices in a certain area, divided by the number of properties in the same area. For example, inside the Willowood Townhouse complex in Salinas, California there were five town homes for sale in March of 2006. The properties were priced as follows: one for $450,000, one for $459,000, two for $465,000, and one for $499,000. The sum of all of these properties is $2,338,000, This number is then divided by five, which equals $467,600. Thus the mean home price for a town home inside Willowood was $467,600 in March 2006.
Per square foot pricing: In per square foot pricing the total price or rent of a unit is divided by the square footage of the unit

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