You've looked at enough houses to know there's no such thing as an "average" home...
So why, then, do so many news stories and provincial or national home statistics list 'average' prices?
In reality, 'average prices' do not help in understanding the true value of a home. What does help is basing the value of your home on the selling prices in your own neighbourhood.
Suppose five homes in a neighbourhood recently sold for $200,000, $220,000, $260,000, $290,000 and $500,000.
The average is $294,000.
The $500,000 sale is obviously not a typical home in this neighbourhood and skews the average higher than it should be.
If the $500,000 sale is omitted, the average becomes $242,000 - a more accurate indicator of the value of typical homes in this neighbourhood.
A similar skewing of averages occurs regularly in home price surveys. For example, according to the February 2009 BCREA survey, half of the $2.4 billion total value of residential sales in BC occurred in Greater Vancouver.
The average price of homes sold in British Columbia was $420,966 - the most expensive average being Greater Vancouver with $540,436, and others regions/cities ranging from $438,261 in Victoria to $207,831 in Powell River.
This illustrates that Greater Vancouver prices are much higher than other British Columbia markets. Of the 5,768 units sold in British Columbia, 2,265 units were sold in Greater Vancouver. If that city area is taken out of the picture, the British Columbia average price in February 2009 declines 31% to $292,531.
An even further statistical blip occurs in a slowing market because higher priced homes don’t sell as quickly as lower priced homes.
So, clearly, you can't rely on 'average home prices' to make sense of the selling climate where you live!
Keep your eye on the prize - right on your own block - and you'll see the REAL value of homes playing out.