Calculate the nominal and real annual rate of housing price appreciation rate for Miami and for Houston for the requested different time periods using the housing price index data and the inflation index data provided to you in tab A5 of the Excel spreadsheet. In total, you need to calculate 16 values that will appear in the 16 yellow cells of that Excel tab.

Given your results from this problem:

a. What can you say about the magnitude and the volatility of housing price appreciation in the short, medium and long run?

b. Are the results from question 5 consistent with the theory of price appreciation we discussed in the beginning of this course? Briefly explain.

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