Question

According to the Census Bureau, in October 2016, the average house price in the United States was $354,900. In October 2000, the average price was $215,100. What was the annual increase in the price of the average house sold?

Answer 1

Answer:

3.18% price growth rate

Average increase in rent is $8737.5 per year

Explanation:

Average Price in Oct 2000 = $215,100

Average Price in Oct 2016 = $354,900

No of years past = Oct 2016 - Oct 2000 = 16 years

Using following formula to calculate Average increase in price:

PV = FV / (1+r)^n

Value in 2000 = Value in 2016 x (1 + rate of increase )^number of year

215,100 = 354,900 x ${( 1 + r )^16}$

${( 1 + r )^16}$ = 354,900 / 215,100

$\sqrt[16]{( 1 + r )^16} = \sqrt[16]{1.65}$

1 + r = 1.0318

r = 1.0318 - 1

r = 0.0318

r = 3.18%

Average

Total Difference = 354,900 - 215,100 = $139,800

Average Increase = $139,800 / 16 = $8737.5 per year