King, the annual median for the small area you are interested in is a very useful statistic. In my view people/buyers should pay more attention to it as a guide to offering/bidding. As you say it is much less volatile and less impacted by compositional bias.
The other more important reason it is a better guide is that the nature of the market (time it takes to buy sell and settle) and economic conditions doesnt permit/warrant large moves in value. It should generally move 2-5% annually, any more than this and you can guess that there are infuences which tends to be less sustainable over the longer term.
Other influences include but not limited to - credit loosening, high levels of speculation, temporary economic booms, changes to zoning, sharp increase in pop or foreign buyers activity.
