Let's face it, nobody wants to be average. It's the terrain of the unremarkable, the realm of the middle ground.
But while "average" is, by its very definition, nothing to brag about, it does have its place in our world. It shows us the big picture; it reminds us where we stand, right?
Well, to a point. In real estate, average prices in the form of market statistics help us establish broad market trends. These figures convey the lay of the land, and help homeowners compare, at-a-glance, the overall market in a given province, region, or city.
BUT... these sweeping generalizations lose relevance the moment you try relating them to the largest single asset you will likely ever own: Your home.
Many homeowners would like to know how well their properties are holding their value these days, while others, lured by low interest rates, are wondering about getting into the market for the first time.
In either case, the average prices of a given city or region - the ones we see so widely reported because they intrigue the widest range of people - likely have little bearing on your own situation in your own neighbourhood.
Think "Comparable" or "Typical"
A more useful measure of your home's value is the selling price of homes that are similar to yours and located nearby - in other words, "typical" or "comparable" homes in your neighbourhood.
Different neighbourhoods have different ages, sizes and types of homes, varying proximity to parks, schools, transit, shopping and other amenities, varying degrees of safety, etc. So, the price of a typical home in your neighbourhood will be different from prices of typical homes in other neighbourhoods - and different from the average price of all homes in your town/city.
That said, it is difficult for homeowners to do their own surveys because only listing prices - not selling prices - are available to the general public on the local MLS. The best course is to ask your realtor to show you statistics of selling prices of homes similar to yours in your neighbourhood.
Apples and Oranges
When it comes to residential real estate, Average and Typical prices are like apples and oranges:
- Average Price sketches out the very rough outlines of a given market
- Typical Price fills in the details that are most relevant to you
If you're considering a move, the only prices that matters aren’t in the headlines - they're down the street and a few blocks over from where you live today.
Crystal Edwards is a sales representative with Century 21 United Realty Inc. in Peterborough, Ontario.