Question

assume that in january 2020, the average house price in a particular area was $274,500. in january 2001, the average price was $179,000. what was the annual increase in the price of the average house sold? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1

The average annual increase in the price of the average house sold from January 2001 to January 2020 was approximately 2.35% per year. This was calculated using the Average Annual Growth Rate formula.

Step-by-step explanation:

To calculate the annual increase of the average house price sold from January 2001 to January 2020, we need to follow a two-step process. First, find the total increase in price over the given period, then divide the result by the number of years to find the average annual increase. We'll use the formula for the average annual growth rate (AAGR), which is:

AAGR = (Ending value / Beginning value)^(1/n) - 1

where:

• Ending value = $274,500 (average price in 2020)
• Beginning value = $179,000 (average price in 2001)
• n = number of years (2020-2001 = 19 years)

Calculating the average annual increase:

AAGR = ($274,500 / $179,000)^(1/19) - 1

AAGR ≈ 0.023547 or 2.35%

Therefore, the average annual increase in the price of the average house sold was approximately 2.35% per year.