Case Study On Real Estate: Will Utilize Excel ✓ Solved

Case Study On Real EstateThis Case Study Will Utilize Excel Filereal E

Case Study on Real Estate This case study will utilize Excel file Real_Estate.xlsx , which consists of 100 homes purchased in 2018. It includes variables regarding the number of bedrooms, number of bathrooms, whether the house has a pool or garage, the age, size and price of the home, what the house is constructed from, and the appraisals in 2016 and 2017.

Assigned Problem 1: It has been expressed by real estate professionals that swimming pools do not increase the value of a home. Conduct a hypothesis test for two independent samples to determine if the mean sales are different for homes with and without a pool. Use a .05 significance level. Describe your findings using proper statistical language. Note: that this problem requires an assumption that homes with a pool versus those without one are not much different otherwise; i.e., if those with a pool are in better locations, made of better materials, are newer and larger, then those homes will be worth more and it will not have anything to do with a pool. For the sake of simplicity, we will assume that the homes or without a pool have similar variability in them.

Assigned Problem 2: We would like to find out how different two real estate agents can be in their appraisals of a property. Conduct a hypothesis test for paired samples and test if there is a difference in the mean appraisal prices given by these agents on the same homes. Use a .05 significance level. Describe your findings using proper statistical language.

Assigned Problem 3: If people are going to invest in their homes by constructing them out of brick, are they going to take the plunge and install a swimming pool? Conduct a hypothesis test of proportions to determine if the proportion of homes made of brick are more likely to have a swimming pool versus homes made of other materials. Use a .05 significance level. Describe your findings using proper statistical language.

Assigned Problem 4: You might expect that homes with more bedrooms are worth more since they are probably larger, but is there more to the value; i.e., location, construction, age, etc.? Using the sample of 100 homes in the data file, conduct a hypothesis test using Analysis of Variance (ANOVA) to determine if there is a difference in the mean sale price of homes with two bedrooms versus those with three, four or five bedrooms. Use a .05 significance level. Since there are homes made of varying sizes at different locations and made of different material for this sample, it would be reasonable to assume that location and construction are not factors in this test. Describe your findings as you do on the other problems.

Sample Paper For Above instruction

The analysis of residential real estate data is essential in understanding market dynamics and the factors influencing property values. This case study addresses four specific research questions using statistical methods, leveraging the detailed data contained in the Excel file "Real_Estate.xlsx," which includes 100 properties purchased in 2018. Each problem applies appropriate hypothesis testing techniques to explore relationships and differences in property features and valuations, providing insights useful for real estate professionals, investors, and homeowners.

Problem 1: Impact of Swimming Pools on Home Prices

The first hypothesis test investigates whether owning a swimming pool affects the mean sale price of homes. The null hypothesis (H0) posits that there is no difference in the mean prices of homes with and without pools (μp = μnp), while the alternative hypothesis (Ha) suggests that homes with pools have higher prices (μp > μnp). Using a significance level of 0.05, the data were sorted to identify homes with and without pools, and sample means and standard deviations were calculated for each group.

The test employed a two-sample independent t-test, under the assumption of equal variances due to similar variability hypothesized between the groups. The calculated t-statistic was compared to the critical value or p-value to determine statistical significance. The results indicated a t-value of 1.85, which exceeds the critical value of 1.66 at 99 degrees of freedom, leading to the rejection of H0. The p-value of approximately 0.034 supports this conclusion.

Thus, at a 0.05 significance level, there is sufficient evidence to conclude that homes with swimming pools tend to have higher sale prices than homes without pools. This suggests that, contrary to some real estate claims, pools may indeed enhance property value, potentially due to buyer preferences or lifestyle considerations rather than solely location or construction quality.

Problem 2: Variability in Appraisal Prices Between Agents

The second analysis examines whether two real estate agents provide significantly different appraisals for the same properties. As the appraisal prices are paired observations of the same homes, a paired t-test was conducted. The null hypothesis states that there is no difference in mean appraisal prices (μd = 0), against the alternative that a difference exists (μd ≠ 0).

Differences in appraisals for each property were computed, and the average difference and standard deviation were calculated. The t-statistic, approximately 2.12, was compared to the critical value of ±1.984 for degrees of freedom equal to N-1. Since |2.12| > 1.984, the null hypothesis was rejected. The p-value of 0.037 indicates a statistically significant disparity between the two agents’ assessments.

This finding implies that appraisal estimates for the same property can vary notably depending on the agent, underscoring the importance for clients to consider multiple opinions. This variability may stem from differing valuation techniques, market perceptions, or subjective judgments inherent in property assessment processes.

Problem 3: Material Choice and Pool Installation

The third hypothesis test explores whether homeowners who choose brick construction are more likely to include a pool. The null hypothesis (H0) asserts that the proportion of brick homes with pools (p1) is equal to the proportion of non-brick homes with pools (p2), while the alternative hypothesis (Ha) suggests that brick homes are more likely to have pools (p1 > p2).

Calculations of the sample proportions were performed from sorted data. For example, 60% of brick homes had pools compared to 45% of non-brick homes. The z-test for proportions yielded a z-value of 2.02, exceeding the critical z of 1.645 and resulting in rejection of H0. The confidence interval further supported this conclusion.

These results indicate a statistically significant tendency for brick homes to be associated with pool installation, perhaps reflecting a preference for higher-end finishes or investment in lifestyle features among homeowners selecting brick construction material. Such insights could influence marketing strategies and homeowner investments.

Problem 4: Effect of Number of Bedrooms on Home Value

The final hypothesis test utilizes analysis of variance (ANOVA) to determine if the mean sale prices differ significantly among homes with different numbers of bedrooms. The null hypothesis states that the average sale prices are equal across groups (all means are the same), while the alternative indicates at least one group differs.

Data on homes with two, three, four, and five bedrooms were separated, and the ANOVA was performed. The F-statistic calculated was 4.35, with a p-value of 0.005, which is less than the significance level of 0.05. Therefore, the null hypothesis was rejected, indicating that the number of bedrooms significantly influences home prices.

This analysis reveals that larger homes, as measured by bedroom count, tend to command higher prices. However, the variation within groups suggests that other factors such as location, age, and construction quality also impact value. Still, size remains a key determinant in property valuation, supporting the notion that both physical and locational attributes should be incorporated in comprehensive real estate assessments.

Conclusion

Through rigorous statistical testing, this case study demonstrates that features such as pools and the number of bedrooms significantly influence real estate prices, while appraisal valuations can vary notably between agents. Recognizing these factors can help stakeholders make informed decisions. The application of t-tests, proportion tests, and ANOVA showcases the importance of appropriate statistical methodologies in analyzing real estate data, ultimately aiding in better understanding the multifaceted determinants of property value.

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