Median price measures the middle transaction, so it moves when the mix of what sold changes rather than only when values change. In thin luxury markets it swings on tiny samples. Use sale-to-list ratio, months of supply within the price band, and withdrawn listings instead.
It is not wrong, exactly. It answers a question almost nobody is asking, and in thin markets it swings on samples too small to mean anything.
Median price is the number everyone quotes and the one least suited to describing a luxury market. It is not wrong, exactly. It answers a question almost nobody is actually asking.
Agents who understand why are considerably better at explaining a market to a client than agents who repeat the headline.
The middle transaction. Half of sales above, half below. It is robust against outliers, which is precisely why it is used and precisely why it fails here.
In a broad market with many similar transactions, the middle sale is representative. In a luxury market with a handful of dissimilar transactions, the middle sale is one specific house that happened to fall in the middle, and it may resemble nothing else that traded.
The most important failure and the least understood.
Median price moves when the composition of what sold changes, not only when values change. A quarter with several large waterfront sales produces a higher median than a quarter of smaller inland ones, even if every individual property is worth exactly what it was worth before.
So a rising median can mean prices rose, or it can mean expensive things sold. Those are different facts and headlines rarely distinguish them.
This is why medians in thin markets swing violently on tiny sample sizes. Six sales in a quarter, one of them a trophy property, and the number is meaningless.
Price per square foot, adjusted. Better than median because it partially controls for size, though it fails on properties where land, frontage or view dominate the value.
Sale to list ratio. How close properties trade to asking. This describes negotiating conditions more directly than price does, and it moves earlier.
Months of supply within the price band. Overall market supply is irrelevant to a property at the top. What matters is inventory competing at that level.
Withdrawn and expired listings. What failed to sell, and at what price. Absent from almost every published statistic and frequently more informative than the sales.
Days on market, distributed. The average conceals the pattern. A market where most properties sell quickly and a few sit for a year has a misleading average and a very clear distribution.
The single most useful discipline is refusing to treat a city as one market.
Waterfront and inland behave differently. Above and below a price threshold behave differently. New construction and older stock behave differently. Blending them produces a number that describes nothing.
An agent who can say what happened in a specific submarket at a specific price band is providing information. One quoting a citywide median is repeating a press release.
Clients arrive with a headline number and expect it to apply to them. It usually does not.
The productive framing is direct: that figure describes the whole market, your property is in a segment that behaved differently, and here is what actually happened at your level. Then show the segment.
Sellers respect that considerably more than agreement with a number that flatters them, and it establishes early that you will tell them accurate things rather than pleasant ones.
Every market statistic answers a specific question. The skill is knowing which question, and whether it is the one in front of you.
Median price answers what the middle transaction cost. That is rarely what a luxury seller or buyer needs to know.
Because it measures the middle transaction rather than value. When expensive properties happen to sell, the median rises even if nothing changed in value. In thin markets a handful of sales can swing it entirely.
Somewhat, because it partially controls for size. It still fails on properties where land, frontage or view dominates value, which describes much of the luxury market.
Sale-to-list ratio for negotiating conditions, months of supply within the specific price band rather than overall, the distribution of days on market rather than the average, and withdrawn listings — which are absent from most published data.
Because what failed to sell, and at what price, tells you where the ceiling is. It appears in almost no published statistic and is frequently more informative than the completed sales.
Directly. The headline describes the whole market, their property sits in a segment that behaved differently, and here is what happened at their level. Sellers respect that more than agreement with a flattering number.
A select network of the nation's most accomplished luxury real estate professionals.