A to Z challenge: X-bar in housing
X-bar (which I don't know how to type on many devices) stands for the mathematical average also known as the mean. (It looks like an x with a horizontal line over it.) To find the mean, add up all the values in question and divide by the number of values. You'll get a number based on all the values that is somewhere between the lowest and highest.
Another common measure of central tendency is the median. To find the median, just line up the values in numerical order and find the middle one. (If there are an even number of values, there is no middle one. So people go with the average of the middle two.) You'll get a number that's an actual value (or between the middle two) but is only barely affected by the other values.
It's often better to look at a median when the extremes pull the average so far out of whack that the mean stops making much sense. For example, if you're a teenager thinking of working at a fast food place, it might be the case that most people there are making minimum wage, a few people have gotten one or two tiny raises, and a manager or two are making real money. The mean will be some number that does not resemble anyone's actual salary. The median is going to be minimum wage or maybe a salary of someone who's had one raise, and that will give you a much better idea of what your starting wage would be.
Housing values are another example where people generally prefer to look at the median. In fact I am wondering about one right now.
When I bought my house a million years ago (aka 1996), the median cost for a house in my city was $100,000. My house cost only 61.5% of that. It's centrally located but was built in 1955 and is smaller than average (960 square feet).
People say that housing generally just keeps up with inflation (plus needs repairs) so it's not a very good investment. If you want a house anyway, some people say you should just rent until you can afford to pay cash. These things were not true for me. My house value went up faster than my salary, so waiting until I had a larger down payment would not have made things easier for me.
Now gentrification has hit and I'm wondering how my house compares. According to Austin Home Search, the median value in March was $255,000. My 2014 appraised value was $181,308. That puts me at 71.1% (though it's probably higher by now.)
According to Zillow the median list price is $341,000. They say my house is worth $265,305. That's 77.8%.
So it looks like my house value (and the associated property taxes) are still significantly below the median house value in my city. Good to know.
And if my salary had kept up with my house value (the lower one above), I'd be making over $60,000 right now. Heh.
Another common measure of central tendency is the median. To find the median, just line up the values in numerical order and find the middle one. (If there are an even number of values, there is no middle one. So people go with the average of the middle two.) You'll get a number that's an actual value (or between the middle two) but is only barely affected by the other values.
It's often better to look at a median when the extremes pull the average so far out of whack that the mean stops making much sense. For example, if you're a teenager thinking of working at a fast food place, it might be the case that most people there are making minimum wage, a few people have gotten one or two tiny raises, and a manager or two are making real money. The mean will be some number that does not resemble anyone's actual salary. The median is going to be minimum wage or maybe a salary of someone who's had one raise, and that will give you a much better idea of what your starting wage would be.
Housing values are another example where people generally prefer to look at the median. In fact I am wondering about one right now.
When I bought my house a million years ago (aka 1996), the median cost for a house in my city was $100,000. My house cost only 61.5% of that. It's centrally located but was built in 1955 and is smaller than average (960 square feet).
People say that housing generally just keeps up with inflation (plus needs repairs) so it's not a very good investment. If you want a house anyway, some people say you should just rent until you can afford to pay cash. These things were not true for me. My house value went up faster than my salary, so waiting until I had a larger down payment would not have made things easier for me.
Now gentrification has hit and I'm wondering how my house compares. According to Austin Home Search, the median value in March was $255,000. My 2014 appraised value was $181,308. That puts me at 71.1% (though it's probably higher by now.)
According to Zillow the median list price is $341,000. They say my house is worth $265,305. That's 77.8%.
So it looks like my house value (and the associated property taxes) are still significantly below the median house value in my city. Good to know.
And if my salary had kept up with my house value (the lower one above), I'd be making over $60,000 right now. Heh.