In using transaction data to determine the current value of the subject property, it is important to recognize that general market conditions may have changed since a particular transaction occurred. Property A sold 18 months ago for $235,000 and Property B sold 12 months ago for $215,000. If the two properties are priced today at $239,500 and $222,300, respectively, what is the average monthly rate of increase that can be used to adjust comparable prices for changes in market conditions?
A) 0.09%
B) 0.17%
C) 0.19%
D) 0.32%

Question

Quizplus · Accepted Answer

The average monthly rate of increase is calculated by taking the difference between the current price and the sale price, and dividing that number by the number of months between the sale date and the current date. For Property A, the difference is $239,500 - $235,000 = $4,500, and the number of months is 18. So the average monthly rate of increase is $4,500 / 18 = $250. For Property B, the difference is $222,300 - $215,000 = $7,300, and the number of months is 12. So the average monthly rate of increase is $7,300 / 12 = $608.33. The average of these two rates is ($250 + $608.33) / 2 = $429.17. So the average monthly rate of increase that can be used to adjust comparable prices for changes in market conditions is 0.19%.

In Using Transaction Data to Determine the Current Value of the Subject