Rising housing prices
Home values have been rising steadily each year, and this is a rather large investment for you.
Calculate your home equity value over time given a steady growth rate of 0.25% per month. A repeated array of this growth rate (with a length equal to the number of mortgage payment periods) is already stored for you in an object called growth_array
.
The home_value
and cumulative_percent_owned
variables from the previous exercise are available.
This exercise is part of the course
Introduction to Financial Concepts in Python
Exercise instructions
- Calculate the cumulative growth over time using
np.cumprod()
andgrowth_array
. - Forecast the home value over time using cumulative growth array and the initial
home_value
. - Forecast the portion of home equity value owned over time given the
home_value_forecast
andcumulative_percent_owned
. - Run the provided code to see a plot of Home Value vs. Home Equity over time.
Hands-on interactive exercise
Have a go at this exercise by completing this sample code.
import numpy as np
# Calculate the cumulative growth over time
cumulative_growth_forecast = ____
# Forecast the home value over time
home_value_forecast = ____
# Forecast the home equity value owned over time
cumulative_home_value_owned = ____
# Plot the home value vs equity accumulated
plt.plot(home_value_forecast, color='red')
plt.plot(cumulative_home_value_owned, color='blue')
plt.legend(handles=[homevalue_plot, homeequity_plot], loc=2)
plt.show()