It’s confusing for buyers and renters, but the key is understanding what’s being measured – and whether it’s the median or mean cost being used.
ORLANDO, Fla. – In today’s hot housing market, new records seem to be broken every week, but the differing numbers cause confusion among homebuyers and renters.
Instead of focusing on exact numbers, analysts suggest that consumers should focus on the bigger picture.
For instance, a rent study by Zumper found Orlando rents up 35% for the year – but the study was only for two-bedroom apartments. In February, CoStar found that Orlando had the fastest-growing rents in the Sun Belt, rising 24.3% over the same time last year. Meanwhile, a report from real estate analysts Redfin found South Florida rents up more than 34% in a year.
“I think you always have to keep numbers in their proper context,” says Lisa McNatt of CoStar. “There are larger market forces at play that need to be understood.”
Ken H. Johnson, an economist at Florida Atlantic University, says people need to know what the study examines. For example, he recommends that people seeking a rental look at rents in an area, the amenities of the property, the age of the buildings, square footage and school zones. With rental housing, a true apples-to-apples comparison rarely exists.
Many people also fail to understand the difference between median and mean.
Mean is the calculation of prices divided by number of units, better known as an average; median is the middle number between the highest and lowest numbers.
Johnson says medians are easier to calculate, but “medians, especially in rapidly rising markets, can be very misleading. In rising markets, it tends to exaggerate [the rise].”
Source: Orlando Sentinel (03/02/22) Fraser, Trevor
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