What to Expect When Buying a Townhouse in Chicago | Zenlist

Townhouses in Chicago

A townhouse is defined as a multi-story attached single family home with joining walls with one or more similar units. 

Defined as attached, single-family properties, townhomes offer a level of privacy not seen with lofts or apartments (there are no upstairs or downstairs neighbors!), as well as affordability not possible with full-scale single-family homes.

For buyers looking for a great location at a great price in Chicago, townhouses are often a great choice. Keep reading to learn why.

All About Chicago Townhouses

 

Townhouses typically span from the basement to the upper floor, though they share walls with other units. Most are built on lots larger and more spacious than single-family homes and condo properties.

 

Types of Ownership

There are traditionally two types of ownership arrangements on townhomes, and understanding these – as well as how they will affect your budget – is vital before choosing to buy a townhome in the area.

  • Fee simple townhome ownership:With this arrangement, the owner pays a fee to the townhome community for upkeep of the land and shared spaces, though they’re solely responsible for the upkeep of their own unit and its exterior. Insurance will need to cover the exterior of the home as a result.
  • Condominium Townhome ownership:Similar to how condos work, the owner will pay a monthly or yearly fee to the townhome association. Those fees will help cover all exterior maintenance on the land, the shared spaces and each individual unit. The owner’s insurance only needs to cover the interior of the home and any belongings.

 

In the long run, fee simple townhomes have a higher cost if they require lots of exterior upkeep and maintenance. These townhomes also aren’t best if you’re looking for a low-maintenance, hands-off property you can leave unattended for extended periods of time.

Condo-style townhomes will likely have lower maintenance costs, but that doesn’t mean they come free. You’ll want to check the community’s reserve balance, just as you would when buying a condo, and you should ask to audit previous association meeting minutes to be sure there’s nothing maintenance- or fee-related that’s unexpected. You’ll also want to understand the details of the association and make sure there are no internal problems that could affect your unit or your ownership.

Townhouses vs. Single-family Homes

Think of a townhouse as the child of a single-family home and a condo. It’s a little of both, offering the privacy and space of a single-family home, without all the upkeep or costs.

Generally, when compared to single-family homes, townhomes have:

 

  • Lower maintenance costs, especially in condo-style townhomes
  • Less maintenance requirements, making for a more hands-off living experience
  • Lower insurance requirements
  • Lower prices for comparable locations and square footage (often 10 to 20% below single-family prices)
  • Private gardens, balconies and other spaces ideal for families

Townhouses vs. Condos

Townhomes are an upgrade from condos size-wise. They offer more space and are generally better suited for families. They often have a garden and private balconies, and they don’t come with neighborhoods above or below the unit. The one disadvantage is that townhomes are typically more expensive than condos, particularly in in-demand areas.

 

  • More Space
  • Garden, balconies
  • No neighbors above or below

Who Are Townhouses Right for?

Townhouses are ideal for buyers looking for a property in a specific location, but without the budget to purchase a detached, single-family property in the area. They likely want more space than a condo can afford and are therefore considering alternative options like townhomes and lofts.

Townhouses buyers typically aren’t first-time buyers and usually fall into one of three categories:

  • Condo upgraders – These buyers are upgrading from a condo to a townhome to add more space or to accommodate their growing family.
  • Location seekers – These are buyers tied to a very specific location but who are unwilling to make the sacrifices that buying a condo or other smaller property would require.
  • Budget buyers – These buyers want a spacious property in a certain location but cannot afford the price point of a single-family home in the community. They might be tied to an area because of the school district, aging parents or other family obligations.

What to Expect When Buying a Townhome in Chicago

Chicago’s top areas for townhomes are Logan Square and Lincoln Park, though you can find properties spread across the city in all styles, price points, ages and designs.

No matter where you start your search, you’ll want to make sure to follow these tips while evaluating potential townhomes:

 

  1. Keep your eyes on the exterior. There’s a good chance you might be responsible for that exterior, so make sure it’s in good condition. Pay attention to details: are there shingles missing? Is it discolored? Are the gutters intact? Remember, if it’s a simple fee condo, you’re on the hook for any repairs – and the insurance on that exterior. You want to be sure it’s in top condition before you invest.
  2. Peek at parking. Where is parking for the unit? Do you have a dedicated space or do you share it with the community? Can the parking be used for other purposes? Even if the parking situation doesn’t bother you now, could it bother a future buyer down the line? Keep in mind the long-term value and marketability of the property before making a decision.
  3. Be sure about the bathrooms. Sure, a property may say “2 bath,” but if one is in the basement and one’s in the kitchen, how convenient is that to your lifestyle? Make sure the layout of amenities like the bathroom, washer, dryer and other must-haves fits with your needs and preferences.
  4. Enlist a townhome inspector. Do your research now to find an experienced townhome inspector in your area, and ask them what red flags you should be looking for. Once you’ve settled on a property, have them do a full-scale inspection and break down any deficiencies to you. These will need to be addressed by the seller before you buy (or you can negotiate a lower price to help cover them).

 

Townhomes can be a great compromise if you’re looking for a roomy, spacious property without the high price of a single-family home. Just make sure you’re fully aware of the ownership arrangement a property offers, what you’d be responsible for as an owner, and how it could impact your finances before moving forward.

Everything You Have to Know Before Buying a Condo | Zenlist

Header Image Buying a Condo

Buying a condo is a serious undertaking. Not only are you putting up a significant amount of cash on the property, you’re also picking out your home – somewhere you’ll live for five, 10, maybe even 20 years of your life.

You might move your new spouse in. Raise kids there. Get a puppy. It’s a big deal, and because of this, it’s important you go about the buying process carefully, thoughtfully and thoroughly.

First of all, you should ask yourself why you are considering buying a condo. Here are the five steps you’ll want to walk through.

 

1. Learn what are the implications of owning a condo

A condominium, often shortened to condo, is a type of real estate divided into several units that are each separately owned, surrounded by common areas jointly owned. (Wikipedia)

What is a condo?

This type of property presents unique challenges, as you are buying full ownership of one or more individual units and partial ownership in shared “limited common elements”.

Units renovations have limitations: which materials you’re allowed to use, working hours, elevator access and so on. Limited common elements might need some work as well, but who’s responsible? Keep reading to learn more…

2. Understand the reasons why you should be buying a condo

Affordability/Location: Condos are popular in areas with high property values, where a single-family home could be prohibitively expensive. A condo could allow first home-buyers to afford living close to work, in a lively area of a major city.

The Condo Lifestyle: Living in a condo could also have unique benefits no other type of property has, just imagine the city views you could have from the top floors of a high-rise building in a big city.

Flexibility: Also, if you decide to travel for 1 year you can just leave your condo and stop worrying. The level of maintenance for a condominium is way lower than a single-family home in general. This allows for greater flexibility.

3. The risks of buying a condo

Before getting too far into the process, you’ll want to consider the risks that come with buying a condo. These include several lifestyles and financial risks, long-term value risks and the overall market risk you take with a condo property.

Let’s look at each one more in depth.

 

Lifestyle Risks:

Before buying a condo, always ask how many renters are currently in the building – and the maximum number that are allowed. Renters tend to decrease the value of the building (and subsequently your unit), and this can have serious consequences in the long-term.
On the other end, you might want to make sure to be able to rent out your unit if you want to.

  • Neighbors: Your neighbors pose the biggest potential lifestyle risk when buying a condo. Though you may say hello to one in the hall when viewing the property, you won’t really get to know them until you move in – and by then, it could be too late.
  • The noise – Condos come with a considerable amount more noise than single-family properties. There are residents above, below and beside you, and if you’re on a busy downtown street, you’ll probably hear the traffic below, too. Timber condos are especially susceptible to increased noise.
  • The co-ownership – As a condo owner, you don’t have rights to the entire property. You share it with dozens, maybe even hundreds of other people, and there’s a lot that can go wrong in that scenario.
  • The rules – Much like an HOA, condo properties have rules. You need to make sure these rules fall in line with your lifestyle and goals. Can you not decorate certain areas or host parties? That might not be ideal for the budding interior designer or social butterfly. Are you planning to rent your condo out on Airbnb or something similar? The condo association might not allow it.

 

Financial Risks:
There are also financial risks you’ll want to consider before buying a condo, most of which boil down to the lack of control you have on a shared property.

  • Limited Control: For one, you can’t control the building’s overall condition. The condo association or building owner is responsible for keeping up the care and maintenance of the building, while other renters/owners are responsible for their own individual units. You have no way of controlling how well the building is kept or whether its value depreciates over time.
    This is why it’s vital to understand the condition of the building before buying a condo. A comprehensive condo inspection can help. This is way is important to rely on the opinion of an expert when considering the purchase of a condo, especially during the inspection!
  • HOA/Reserve Balance: In the same vein, you’re also at the whim of building management. If they have financial problems or are struggling to stay afloat, that puts your building – its condition, its care and its value – at risk. It could even put you out of a home if the company goes under. Always evaluate a condo’s building manager before opting to buy. What’s their reserve balance? What happens if they have an unexpected expense? Do they have regular meetings? Do they participate actively in the community

 

Always make sure capital and operating balance are on different accounts, to make sure there is enough money in the reserve balance to cover unexpected expenses. Be aware that often smaller building might combine the two on a single account.

It’s also important to understand your financial obligations in the shared setting of a condo community. What are you responsible for if something breaks or needs replacing? Who covers the costs of repairs and maintenance of shared areas? How do you report those and how quickly are they tended to? Make sure you’re not on the hook for more than you can afford.

 

 

Long-term Value Risks:

With any property you purchase, you want to ensure long-term value. In the event you sell your condo down the line, you want to make back your money – and then some. Unfortunately, because so much is out of your control as a condo owner, protecting the long-term value of your purchase is a bit harder. You have to deal with:

  • Mismanagement of the building: If there’s suddenly a big problem or repair needed on the property, does the building manager have enough cash reserves to cover it? What if they cut corners and do shoddy work? What if you want to sell? You’ll likely take a hit on your sales price if underlying issues are at work.
  • Your neighbors’ sales: Comparable sales play a big role in how much you can list a property for when it’s time to sell. If your neighbor is in dire straits and sells their condo for 30% under what it’s worth, that hurts your ability to list yours at full-value, too.
  • Building instability: Unexpected financial events, unpredictable neighbors and building management can put the building in an unstable condition. This could make it hard to find an interested buyer down the line, let alone one willing to pay a good price.

 

Condos are also simply more sensitive to market change. They gain value faster when local conditions are positive (meaning they’re great for a short-term investment or flip), but this also makes them a riskier buy, because it’s hard to predict their long-term ROI.

Still, risks aside, their market sensitivity does come with a few advantages. For one, you might be able to get a really nice property in a high-end neighborhood without paying nearly the price you would on a single-family home. You also get to enjoy a low-maintenance, low-responsibility living situation – another advantage over single-family properties.

4. Identify Your Priorities

Once you’ve weighed the potential risks of buying a condo, it’s time to think about your lifestyle priorities – what you want from the condo today, tomorrow and 10 years down the line.

You’ll want to consider:

  • Living vs. renting – Do you want to live in the property or rent it out? If you’re considering renting it, make sure you know the rules for your condo building. If you want to live there, be sure it checks all the boxes regarding space, amenities, location, transportation access and more.
  • Pets – Do you have a pet? Would you possibly want one in the future? Many condo buildings have strict no-pet policies, and some also have restrictions on certain breeds and animal types. If your furry friends are a priority, find out early on what a building’s pet policies are – and make sure those aren’t changing anytime soon.
  • Appliances – Is there a fridge in the unit? A washer and dryer? If not, do you need to buy and install them? Or are you forced to use shared units or laundromats? Make sure the condo has all the appliances you need or, if it doesn’t, that you’ve budgeted enough cash to cover them yourself.
  • Access – Does the condo have balcony or roof access? Somewhere you can grill a steak or take a dip in the pool? Does it offer easy access to trains, subways, metros and bus lines? Are there parking spots for your cars? Think of all the things you want access to in your day-to-day life, and make sure your condo can offer it.

These may seem like small details, but they can make a big impact on your everyday life. You don’t want to fall in love with a place, buy it and move in only to find out Fido’s not welcome or you need to buy $10,000 worth of appliances just to cook and clean your clothes!

5. Location, location, location!

Finally, it’s time to weigh potential locations. In Chicago, condos are everywhere. You can find them in virtually every neighborhood and every community. Some are housed in historic, centuries-old buildings, while others are brand new, modern and hip.
Honing in on the right location is crucial – both from a financial standpoint and a lifestyle one.

Not sure where to start?

 

Here are Chicago’s top five condo neighborhoods as of May 2018:

 

LOGAN SQUARE:

Logan Square is known for is small, more modern new condos, as well as its vintage units upgraded with contemporary features and amenities. Condos in Logan Square are popular with younger buyers and families, due to the great local schools.

Browse Condos in Logan Square

WEST TOWN:

West Town has a great mix of condos. From small, affordable, pre-2008 units to more modern, midsize ones from the last five years, there’s a little something for everyone in this neighborhood.

Browse Condos in West Town

RIVER NORTH:

Luxury and boutique condos are a popular sign in River North, as are lofts – another type of property that’s hot with Chicagoans. The neighborhood boasts tons of new construction as well as existing mid-rise buildings.

Browse Condos in River North

ALONG THE LAKE:

Whether you’re looking for mid-century high-rise condos with a lakefront view or a vintage courtyard condo with tons of charm, you’ll find it along the lake. Just beware of some of the older condos and be sure to have them inspected by a qualified condo inspector.

Browse Condos Around the Lake

WEST LOOP:

Chicago’s tech hub and the spot to go for a great meal or night on the town, the West Loop has become a popular spot for younger residents. The neighborhood boasts both modern and luxury condos, as well as lots of loft options.

Browse Condos in West Loop

 

Now that you’ve learned pros and cons when buying a condo you might want to look at locations and property types. Check these articles:

The Zenlist Guide to Chicago’s Lofts

The Zenlist Guide to Chicago Lofts for Sale – June 2018 | Zenlist

A stylish Chicago Loft for Sale

Lofts are a popular type of real estate among Chicagoans–and it’s no wonder why.

With their stand-out architectural elements, stunning features like exposed brick and soaring ceilings, and, in many cases, prime locations in the city, they’re as unique as those who live in them.

Boasting storied backgrounds and past lives, each and every one is different. There are the old pencil factory lofts. The countless mixed-use, live-and-work lofts. School and church conversions lofts. Even old brewery lofts.

When browsing for Chicago lofts for sale the options are endless.

About Chicago Lofts

Open, airy and often historic, Chicago’s lofts are particularly popular with young professionals–ones looking for a quick walk to work and easy access to Chicago’s sights and sounds.

Loft Eras

Generally, Chicago’s lofts fall into on of these two eras:

 

  • 90s-2000 era – These usually have unique, unexpected layouts due to the lower cost of real estate at the time, and they’re a little funkier than today’s newly built lofts. They also have true, loft-style walls that stop just short of the ceiling.
  • 2000-today – Modern lofts have a more traditional in layout and often have a more refined feel than older ones. They have full walls, real do, rs and more expected arrangements. There are a few exceptions, of course. Some builders have intentionally created modern lofts with a more raw feel to them–mimicking older style lofts from decades past.

Loft Types

Chicago lofts also typically fall into either the timber style or the concrete style. Concrete lofts boast concrete floors and pillars and often have a colder feel than timber ones. They’re very insulated from noise and sound. Timber lofts, on the other hand, are warmer–both in temperature and in atmosphere. They also tend to be noisier than concrete lofts.

One of the most interesting tidbits about Chicago lofts is that many of them weren’t actually built to be lofts. In fact, some of the city’s most popular lofts are housed in old movie production facilities, factories, churches, schools and more.

Just check out this recently sold loft. Located in a converted church, it offers sweeping views, a spacious layout, unique features and a prime location on Chicago’s North Side. Lofts like this pop up all over the city as developers repurpose old and existing buildings.

The Loft Lifestyle

Loft living is a truly unique experience—especially for those who choose one of the many historic or themed lofts located in the city.

Consider the Pencil Factory Lofts, for example. Branded for their interesting background and one-of-a-kind story, they give residents a glimpse into times past with their 1920s-era architectural elements and throwback features. They’re authentic, interesting and real—exactly what loft living’s meant to be.

Other local lofts that lend themselves to this unique style of living include:

 

The Locomobile Lofts

One of many auto-inspired lofts. These lofts are located at 2000 S Michigan Ave, in South Loop.

The Prairie District Lofts

These lofts are situated in an old Kodak facility, at 1727 S Indiana Ave, in Prairie District/Near South Side.

The Donohue Building

Located on Printer's Row, along with The Manhattan Building, The Paper Place Lofts and The Rowe Building. These old warehouses are now converted to stylish loft condos.

The Cinema Lofts

The Cinema Lofts are located in a 1920s movie house at 1635 W Belmont Ave, Lakeview.

Best Brewing Company Lofts

One of countless brewery lofts. The Best Brewing Company building has been built in 1888. It's located at 1301 West Fletcher Street, in Lake View.

Hot Loft Neighborhoods

You can find lofts all across the city, but if you’re looking for Chicago lofts for sale some neighborhoods have more options than others.

West Loop, for example, is a particularly popular spot for lofts. Located close to the city’s cutting-edge tech and startup companies, its one of Chicago’s hottest places to live.

West Loop lofts offer easy access to restaurants, cafes and nightlife, as well as great public schools. Local lofts come in all kinds of styles—timber, concrete, mixed-use and conversions—and start at just $450-$500K for smaller, 1,200-1,300 square foot properties.

 

PROS: Close to tech startups offices, hot and trending, plenty of cafes and people, a great number of lofts (both timber and concrete)
CONS: Pricier than any other neighborhood, the neighborhood has mostly lofts so the view can be “monothematic”

 

River North is another top spot for lofts, offering quick access to the Magnificent Mile shopping district. It’s famous for its fine art and design and is well known for its affordable timber-style lofts. They generally run from $425-$450K for a 1,200-1,300 square foot unit.

 

PROS: Well established neighborhood, stylish neighborhood that borders Magnificent Mile and is just across the bridge from The Loop, great timber lofts
CONS: Not as “hot” as West Loop, Price just below West Loop

 

Logan Square/Bucktown, a former industrial area is also popular for loft lovers. With tons of historic and unique conversion lofts, it offers the most vintage properties in the city. The neighborhood is popular with younger buyers, has great schools and is located conveniently near public transport. Because of its differentiated housing, many people relocate from lofts to single-family homes without having to switch neighborhood. Lofts in Logan Square are usually priced at $400K or lower.

 

PROS: Plenty of old-school/original lofts, each loft has an identity associated with the history of the building, differentiated housing, great price!
CONS: Not as hot as the previous neighborhoods but “great bang for the buck”

 

Ravenswood Corridor is an interesting two-mile strip from Irving Park to Peterson, following the metro line. It’s full of unique and historic buildings, as well as popular yoga and design studios. The corridor is easily one of the city’s fastest-growing neighborhoods and offers quick, easy access to downtown. Lofts ranges from $375 to $425K here.

 

PROS: Interesting and trending location, unique buildings, fast growing neighborhoods and great lofts
CONS: Still developing

 

South Loop is another Windy City hub for lofts, thanks to its property-filled Printers’ Row area. It’s a very residential neighborhood, making it great for families, and it offers many luxury properties for higher-end shoppers. The average sized loft in the area runs between $375K and $425K with the north being more expensive.

 

PROS: One of Chicago’s original residential areas, unique lofts
CONS: While residential development was booming a few years ago, non-residential development didn’t have the same growth.

 

Love Lofts? Come to Chicago

For loft lovers, there’s no better place to call home than Chicago.

From the busy West Loop and River North areas to smaller neighborhoods like Roscoe Village, Lincoln Square and Edgewater, the city is brimming with loft options from top to bottom.

Want more recommendations on Chicago lofts? Not sure if loft living is for you? Then talk to local agent Robert Safranski. He’s our loft guru and can give you the guidance you need.

Home Inspection – Chicago Home Buyers Guide | Zenlist

Chicago Home Inspection

How Much Does a Home Inspection Cost?

Home inspection costs are generally based on square footage of the property in question. The national average for a 2,000 square foot home is $324, though it ranges anywhere from $277 to $388 depending on the market.

In Chicago, specifically, the average a bit higher. Angie’s List reports an average between $375 and $550, while Home Advisor puts it between $260 and $351.

These averages do not include specific inspection services like:

  • Termites inspections (additional $65 to $100)
  • Asbestos inspections (additional $400 to $800)
  • Radon inspection (additional $100 to $200)
  • Mold inspections (additional $300 to $500)
  • Swimming pool inspections (additional $90 to $130)

The prices on these more specialized services vary based on the size of the property and the company providing the inspection.

How Much Can a Home Inspection Save You?

The total amount a home inspection save you depends on the deficiencies and repairs found on the property. Identifying major issues, like problems with the roof, foundation or mold, can save you significant costs and hassle down the line. More minor issues may save you slightly on your sales price or make no difference at all.

Let’s look at a few of the most common issues found during home inspections for some reference:

  • Foundation issues – These can cost anywhere between $1,852 to upwards of $6,000, depending on the extent of the damage.
  • Mold – Mold problems can run between $2,000 and $6,000 to address and can cause a slew of health problems and allergies.
  • Wiring issues – Problems with electrical systems or wiring often require major repairs costing between $8,000 and $15,000.
  • Roof problems – This is one of the most common issues found during home inspections. If the full roof needs replacement, it can cost $7,000 or more.

HVAC, plumbing and appliance issues are also found often in Chicago home inspections. The costs on these vary depending on the extent of the damage found.

Getting a Home Inspection in Chicago? Follow These- Dos and Don’ts

The home inspection is a vital part of the homebuying process, as it helps buyers ensure they’re making a safe and sound investment – both for their loved ones and their finances.

Not to be confused with an appraisal, a home inspection is intended to evaluate the overall condition of the home, not determine the value of the property.

During a home inspection, the inspector will examine the property’s roof, plumbing, heating and cooling systems, electrical systems, foundation and more in light of local safety and building codes, as well as construction best practices. Once the inspection is complete, the inspector will deliver a report detailing their findings.

Must-have Chicago Inspections

In Chicago, buyers will want to at least have the basic home inspection, which covers things like: appliances, plumbing, foundation, roof, HVAC, plumbing, electrical systems and the overall interior and exterior of the home.

If the inspector notes mold anywhere on their findings report, buyers should also consider a professional mold inspection to ensure the home is safe to inhabit. In some cases, buyers may also want to consider the following inspections:

  • Termite inspections – The Eastern Subterranean Termite is a common sight in Chicago – particularly in the Glenview area. As termite issues can cost around $3,000 or more to address, spotting these before buying a property is vital.
  • Radon testing – The city of Chicago’s health department has recommended residents test for radon in their homes and new properties. Considering the service is on the more affordable side (just $100 to $200, on average), it may be worth it for peace of mind.
  • Asbestos inspections – For buyers considering older properties or homes where asbestos is known to be used, an asbestos inspection is a must.

More specific inspections like those for pools and other systems depend on the exact features and home of the location being purchased.

How to Save Money on a Home Inspection

Though you certainly don’t want to cut corners on something as important as a home inspection, there are a few ways to potentially reduce costs when seeking inspection services.

  1. Go hourly. If the contract doesn’t require a formal report or a full inspection, buyers may be able to ask for an hourly rate or reduced price on their service.
  2. Find an inspector that also does repairs. In some cases, inspectors may be qualified to perform certain repairs. When this is the case, buyers may be able to ask that the cost of the inspection is credited toward any repairs, should they be necessary.
  3. Be prepared to negotiate. By heading back to the negotiating table, buyers can request repairs or credits when deficiencies are found.

In many cases, a comprehensive home inspection can save buyers thousands of dollars. When repairs or deficiencies are found, the report can serve as a bargaining chip to negotiate a lower sales price.

Still, despite these potential savings, it’s important not to overpay for your inspection. Make sure to get quotes from at least three different inspectors before moving forward, and weigh experience, knowledge and price when choosing which inspector to employ.

After the Home Inspection – Three Possible Outcomes

There are generally three scenarios that can emerge from a home inspection.

  1. The inspection can reveal the home is safe, sound and in need of no repairs or fixes. If this is the case, the transaction can move along to the next step in the homebuying process.
  2. The inspection can reveal moderate issues with the home. When minor repairs and fixes are needed, the buyer can negotiate a credit to help pay for the repairs or ask the seller to make the fixes themselves before closing.
  3. The inspection may reveal serious or costly issues. When major deficiencies or problems are found, the seller may opt to back out of the deal entirely. They may also choose to renegotiate the sales price of the home or ask the seller to cover a portion of the closing costs to make up for the financial loss of the repairs.

A real estate transaction isn’t done until the money changes hands and the deed is transferred. Thanks to contingencies and home inspections periods, there are plenty of chances for buyers to safeguard their investment and ensure they’re making the right decision for their household.

When Should I Use The Median Home Price vs Average Home Price? – Real Estate Market Guides | Zenlist

When To Use The Median Home Price? When To Use The Average Home Price?

Both median home price and average home price are pulled from the same set of numbers, but the two are usually very different – both in number and meaning.

While median represents the middle-of-the-pack price – what a home right in the center of a market’s offerings would cost – the average is a bit different. Instead, the average home price refers to the mean price of homes in an area, once added together and averaged out.

In our earlier example, the average home price would be calculated like by adding all home prices: $246,000 + $299,000 + $384,000 + $406,000 + $1,000,000 = $2,335,000. You would then divide that by the number of data points in the set (5, in this case), to get the average home price: $467,000.

As you can see, the average price is actually $83K more than the median home price, even though it uses the same data. Here’s a graphic that spells out just how different median and average prices can be for the same area:

The Benefit of Using Each

The average price is best used in situations where the dataset is evenly distributed – with plenty of numbers on the higher, middle and lower-cost end contributing to it. If it’s used in a smaller set, it can often be skewed by extreme prices on of either end of the spectrum.

The median home price, on the other hand, is a great choice when data sets are small and not evenly distributed, as it’s not impacted by extreme numbers. It’s also a better option when looking for the price of a “typical” home in an area, as it’s harder to skew with the occasion million-dollar home sale or bargain-basement foreclosure.

The important thing to note is that median home price and average home price can be quite different – particularly if prices aren’t evenly distributed. Make sure you know what type of data is being used before you take either number into account in your home search.

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