Suppose that we observe two comparable properties that have each sold twice within the past four years. Property A sold 24 months ago for $500,000 and Property B sold 48 months ago for $575,000. If the two properties were sold today at $425,000 and $465,000, respectively, estimate the change in market conditions (percentage change in price) per month, assuming we equally weight the two properties in our analysis?
A) -0.56%
B) -0.51%
C) 0.61%
D) 0.68%

Question

Quizplus · Accepted Answer

To estimate the change in market conditions per month, we can first calculate the percentage change in price for each property:
- Property A: ($425,000 - $500,000) / $500,000 = -0.15 or -15%
- Property B: ($465,000 - $575,000) / $575,000 = -0.19 or -19%
Then, we can find the average percent change by taking the average of the two percentages:
(-15% - 19%) / 2 = -0.17 or -17%
Finally, we can divide this average percentage change by the number of months between the two sales for both properties:
- Property A: 24 months / 2 sales = 12 months between sales
- Property B: 48 months / 2 sales = 24 months between sales
(((-0.17) / 12) + ((-0.17) / 24)) / 2 = -0.0051 or -0.51% per month
Therefore, the answer is B.

Suppose That We Observe Two Comparable Properties That Have Each