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Sample Case With A Report Dawit Zerom Instructorcase Study Ft Myer

Compare the mean and median in each of the two sample periods.

Compare the standard deviation and coefficient of variation in each of the two sample periods. Also incorporate quartiles.

Discuss significant changes in the housing market in Fort Myers over the 6-month period.

Paper For Above instruction

The housing market in Fort Myers, Florida, experienced notable fluctuations between January and July 2007, primarily influenced by the broader subprime mortgage crisis that gripped the United States during this period. To analyze these changes, data from 25 single-family homes sold during each of the two months were examined, focusing on metrics such as mean, median, standard deviation, coefficient of variation, and quartiles.

Comparison of Means and Medians

In January 2007, the average sale price of homes was approximately $231,080, while in July 2007, it decreased significantly to about $182,720. This decline indicates a roughly 21% drop in average home prices over the six-month span. The median sale prices revealed similar trends: January's median was approximately $205,000, whereas July's median dropped to around $180,000. Given that the mean is susceptible to outliers or unusually high prices, the median often serves as a more reliable measure of central tendency in real estate data, and it corroborates the downward trend in home prices.

Variability: Standard Deviation, Coefficient of Variation, and Quartiles

The standard deviation for January was approximately $113,690, indicating a wider dispersion of home prices compared to July's standard deviation of approximately $69,380. The coefficient of variation (CV), which adjusts the standard deviation relative to the mean, was about 0.49 in January and reduced to approximately 0.38 in July. This decline suggests that home prices became more clustered around the mean in July, implying decreased variability and increased market stability for buyers.

Quartile analysis further illustrates these changes. The first quartile (Q1), which indicates the 25th percentile, was approximately $158,000 in January and decreased to about $133,000 in July, implying that the lower price range shifted downward. The third quartile (Q3) was around $256,000 in January and fell to approximately $215,000 in July, reinforcing the trend of overall price decline and compression of the price distribution in the latter month.

Discussion of Market Changes

The observable decline in both mean and median home prices demonstrates a significant downturn in the Fort Myers housing market over the six months examined. The substantial reduction in average prices aligns with national trends during the same period, driven by tightening credit conditions, declining property values, and decreased buyer confidence associated with the subprime mortgage crisis. The reduction in variability as shown by the standard deviation and coefficient of variation suggests that the market transitioned from a more volatile environment to a steadier, albeit lower-valued, market.

Furthermore, the decrease in quartiles indicates that not only did the overall price levels drop, but also the lower end of the market (Q1) experienced a sharper decline. This trend could imply increased affordability for buyers with access to financing and possibly increased inventory or distressed sales. The shrinking interquartile range points to decreased price dispersion, which often occurs during market corrections as high-value homes decrease in value and market conditions stabilize.

In essence, Fort Myers, a booming market before the crisis, experienced a clear downturn marked by lower prices, reduced variability, and a shift towards a buyers' market—reflecting the broader national economic environment at the time. These statistical findings underscore the direct impact of macroeconomic factors on local real estate markets and highlight the importance of comprehensive data analysis to understand such trends.

References

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