How home prices are measured: average, median and benchmark

When the news says home prices rose or fell, the figure can mean very different things. Knowing which measure is being used helps you read the market correctly.

The short version: the average is easily skewed, the median is the middle price, and the benchmark price tracks a typical home over time. For your decision, look at recent sold prices of homes like yours.

The main measures

• Average price: the total of all sales divided by the number of sales. It is easily pulled up by a few very expensive homes or down by a change in what is selling.
• Median price: the middle price. Half of the sales were above it, half below. It is less affected by extremes, and it is the one many boards quote.
• Benchmark price (house price index): tracks the price of a typical home with fixed characteristics, such as the Canadian Real Estate Association's MLS Home Price Index. Because it holds the mix of homes constant, it is a better indicator of price change over time.
• Asking price: what sellers hope for.
• Sold price: what buyers paid, which is what matters.
• Assessed value: your municipality's value for tax, which is usually out of date.

Example

Five sales in a month at $400,000, $450,000, $500,000, $550,000 and $2,000,000.

• Average: $780,000.
• Median: $500,000.
• If the $2,000,000 sale had not happened, the average would fall to $475,000 with no real change in the market.

Why the numbers can mislead

• Mix: if more large homes sell one month, the average rises even though no home became more valuable.
• Small samples: a few sales in a small town can swing the figure.
• Seasonality: spring numbers are usually higher than winter ones, so compare with the same month last year, or use a seasonally adjusted series.
• Property types: condos, townhouses and detached homes behave differently, so a combined figure can hide trends.

Where to find the numbers

The Canadian Real Estate Association publishes national and city statistics every month, and local boards such as TRREB, REBGV and others publish their own. Look at sold prices, days on market and the sales-to-new-listings ratio together.

For your own decision

Look at recent sold prices of homes like yours, not just headline numbers. Compare homes with a similar size, age, condition and location, and ignore asking prices. Our Property Calculator starts from regional data to give a reference estimate.