Final answer:
The market price of real estate is typically the same as the market value, the price a willing buyer pays for a property. The assessed value is different, used for taxation and can vary from market value. Over time, real estate prices have generally seen an average annual increase, reflecting inflation and market conditions. The correct option is 2.
Step-by-step explanation:
The market price of real estate is generally the same as the market value, which is the price a buyer is willing to pay for a property on the open market. Sales prices reflect what buyers actually pay for real estate, which should align with the market value when the sale represents a fair and open transaction.
The highest and best use is a real estate concept that denotes the most profitable use of a property, which may influence its market value.
On the other hand, the assessed value is a valuation placed on a property by a public tax assessor for purposes of taxation, which often differs from the market value due to various assessment rules and exemptions.
As history shows, housing prices have tended to rise over time. For instance, the median sales price for a one-family home significantly increased from $122,900 in 1990 to $232,000 in 2016. This trend is mirrored by annual price increases which have averaged 3.1% per year, as per the FRED® Economic Data and U.S. Census data. The correct option is 2.