Suppose that we observe two comparable properties that have each sold twice within the past two years. Property A sold 24 months ago for $350,000 and Property B sold 18 months ago for $325,000. If the two properties were sold today at $375,000 and $340,000, respectively, estimate the change in market conditions (percentage change in price) per month, assuming we equally weight the two properties in our analysis.

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Business

Elijah

19 December, 03:26

Suppose that we observe two comparable properties that have each sold twice within the past two years. Property A sold 24 months ago for $350,000 and Property B sold 18 months ago for $325,000. If the two properties were sold today at $375,000 and $340,000, respectively, estimate the change in market conditions (percentage change in price) per month, assuming we equally weight the two properties in our analysis.

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Jaycee Kramer · Answer 1

0.28 %

Explanation:

Property A:

Percentage change in prices = (New price - old price) / Old price

= (375000 - 350000) / 350000

=.0714 = 7.14%

Monthly percentage = 7.14/24=.2975%

Property B:

Percentage change in prices = (New price - old price) / Old price

= (340000 - 325000) / 325000

=.0461 = 4.61%

Monthly percentage = 4.61/18=.256%

As they have equal weightage = (.256 +.2975) / 2

=.2767=.28%