Question

Florida reappraises real estate every year, and the county appraiser's Web site lists the current "fair market value" of each piece of property. Property usually sells for somewhat more than the apprasied market value. Here are the appraised market values and actual selling prices of condominium units sold in a beachfront building over a 9-month period (in thousand dollars).

Selling Price Appraised value Month Selling Price Apprasied value month

850 758 0 790 605.9 13

900 812.7 1 700 483.8 14

625 504 2 715 585.8 14

1075 956.7 2 825 707.6 14

890 747.9 8 675 493.9 17

810 717.7 8 1050 802.6 17

650 576.6 9 1325 1031.8 18

845 648.3 12 845 586.7 19

(a) Make a scatterplot. It appears that apprasied market value can be used to predict selling prices.

(b) Find the least-squares line for predicting selling price from apprasied value. Add this line to your scatterplot. Another unit in this building has appraised value $802,600. What do you predict that it will sell for?

Answer 1

A)

B)

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.927658384
R Square	0.860550077
Adjusted R Square	0.850589369
Standard Error	69.7298912
Observations	16
ANOVA
	df	SS	MS	F	Significance F
Regression	1	420072.1418	420072.1418	86.3944623	2.29278E-07
Residual	14	68071.60817	4862.257726
Total	15	488143.75
	Coefficients	Standard Error	t Stat	P-value	Lower 95%
Intercept	127.2704936	79.48916173	1.601104991	0.131670109	-43.21680234
Appraised	1.046612713	0.112601209	9.294862145	2.29278E-07	0.80510714

selling price ^ = 127.2705 + 1.0466* Appraised

when appraised value $802,600.

selling price = 127.2705 + 1.0466* 802600

= 967.27166