Evaluating a Long-Term Housing Investment
Based on the following scenario, calculate the total real capital gain on the housing investment, expressed in the currency of the sale year.
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Evaluating a Long-Term Housing Investment
An individual purchased a house in Year 1 for $250,000 and sold it ten years later for $400,000. The general price index was 150 in Year 1 and 225 ten years later. What was the real capital gain on this housing investment, expressed in Year 1 dollars?
Calculating Real Capital Gain on a Property
An investor bought a house for $300,000 and sold it 15 years later for $450,000. During this period, the overall price level in the economy increased by 50%. The investor correctly concluded that they realized a real capital gain on the property.