case study

Case Study 1

Real Estate Pricing

Econ 2100

The Issue

You are a statistical analyst for a large company in the Puget Sound area that hires employees from all over the US and the world. The personnel director of the company has asked you to prepare an analysis of area home prices for new employees moving to the area. Your task is to provide information to new employees about the housing market in the area, including what new employees can expect to pay for a home, what are the characteristics of area homes, and how do homes differ across different locations in the area.

Data

Your first task is to choose a location for your company (feel free to choose an actual company and base your choice on its location), then gather data on homes for sale in that zip code and three contiguous zip code areas. Please work with two or three other students to gather a common data set. You may use zillow.com or a similar real estate website to randomly select 15 single-family homes that have recently been sold in your chosen area and three adjoining zip-code areas. Your data set will be unique to your group. For each home you select, please record the following information:

1. PRICE: the price for which the home was sold

2. BEDROOMS: the number of bedrooms in the home

3. BATHROOMS: the number of bathrooms in the home

4. HOUSE FT2: the square footage of the home

5. LOT FT2: the square footage of the lot

6. YR BUILT: the year the home was built

7. ZIP CODE: the zip code where the home is located.

If there are other variables you would like to collect, make sure that the information is available for each observation so the data set is consistent.

Statistical Analysis

Apply descriptive statistics methods to summarize the data you have collected on area homes. At a minimum, in your analysis, you should:

· Check your data for outliers, using one of the standard methods covered in class (the outlier may be with respect to price, or one of the other variables)

· Create a table of descriptive statistics that gives the mean, median, minimum, maximum and standard deviation for all quantitative variables for the entire data set (see example at the end of this document).

· Create a separate table of descriptive statistics for each zip code, giving the mean, median maximum, and standard deviation of all quantitative variables.

· Create a histogram illustrating the distribution of home prices in your data set

· Create a histogram illustrating the distribution of home sizes in the area you have chosen.

Writing Project

Your written project will consist of a1-2 page memo (500 word maximum, plus tables and figures) to new employees that tells them what to expect when searching for a home in near their new place of employment. Your writing project will summarize the results of your statistical analysis in language understandable to someone who is intelligent and curious, but who may not have taken a statistics course.

a. Give an overview of the distribution of home prices in your chosen area.

b. Give an overview of the other characteristic of home prices in the area.

c. Point out differences in the price and other characteristics of homes across different zip codes that might be relevant to employees searching for homes.

d. Give the employee a realistic idea of what he or she might expect to pay for a single family home in the area, and what characteristics that home is likely to have.

Due Date

Please submit your memo, including tables and graphs, on Canvas prior to the date and time listed in the course syllabus. Late papers will not be accepted electronically.

Example of a well-formatted table of descriptive statistics: