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Real estate
pricing
There are two major ways in which home prices are recorded: these are Median and Mean (average). Prices are also sometimes calculated by square foot, using both the mean and median price. Real estate prices, of late, have had a huge impact on urban, as well as the suburban and rural landscape.
Median home price
The median home price
is defined as the threshold that divides the real estate market into two
equal halves, with reference to pricing. Studies have revealed that almost
one half of all homes in the market are priced above the median home
price, while the other half are priced below it. The median home price is
one of the most common measurements used to compare real estate prices
across different markets, areas, and periods. It is said to be less biased
than the mean or average, since it is not as heavily influenced by the top
2% of homes.
Mean (average) home price
The mean home price, or average home price is defines as the sum of all home prices in a certain area, divided by the total number of properties in the same area.
Per square foot pricing
In per square foot pricing, the total price or rent of a unit is divided by the square footage of the unit.
Sales price per square foot
Sometimes real estate prices are measured in terms of
the price of each square foot. This aids in a better comparison
between
differently priced homes as well as homes of varying sizes. In this method
of pricing measurement, the median or mean price of a home is divided by
its square footage. Many a time, in order to effectively compare
neighborhoods, the mean or median home price of a neighborhood is divided
by the mean or median square footage.
Rent per square foot
Rent can also be calculated by square foot. The rent per square foot is often used as an effective tool when it comes to comparison of tenements and different markets, when the units involved are of different sizes.
External effects
The declining real
estate prices have most often been identified as one of the driving forces
behind urban decay. Real estate prices have been proven to have a profound
impact on an area since they can cause urban decay, over crowding as well
as an urban renaissance. Urban decay refers to the low real estate prices
having a negative effect on landlords and these neighborhoods begin to
resemble that of down-market locales. Overcrowding occurs when real estate
prices reach an unnatural high and cause a sudden inflow of investors. On
the other hand, urban renaissance also is a result of increased real
estate prices, which sees a pleasant face-lift of localities further to
the upward trend of land prices.