Case - Housing Price Structure in Mid City

Tasks:

Read the case. [Sales of single-family houses have been brisk in Mid City this year. This has especially beentrue in older, more established neighborhoods, where housing is relatively inexpensive compared to the new homes being built in the newer neighborhoods.

Nevertheless, there are alsomany families who are willing to pay a higher price for the prestige of living in one of the newer neighborhoods. For each sale, the file shows the neighborhood(1, 2, or 3) in which the house is located, the number of offers made on the house,the square footage, whether the house is made primarily of brick, the number of bathrooms, the number of bedrooms, and the selling price.

Neighborhoods 1 and 2 are more traditional neighborhoods, where as neighborhood 3 is a newer more prestigious neighborhood]

Observe that this file contains a worksheet named "Data."

Run a regression model to estimate and interpret the pricing structure of houses in Mid City based on explanatory variables "Offers," "Sq. Ft," "Bedrooms", "Bathrooms," "Neighborhood," and "Brick." The complete result of this regression, including the "Scatter Plot of Residual vs Fit" should be included in a worksheet named "Regression 1."

Run a second regression model by adding an interaction between "Brick" and "Neighborhood" to the set of variables described above for "Regression 1." The complete result of this regression, including the "Scatter Plot of Residual vs Fit" should be included in a worksheet named "Regression 2."

Run a third regression by choosing a set of variables that you suspect will generate better results. The complete result of this regression, including the "Scatter Plot of Residual vs Fit" should be included in a worksheet named "Regression 3."

1. One Excel file:
The complete Excel file containing four worksheets; namely, "Data," "Regression 1," "Regression 2," and "Regression 3."

2. One PDF or WORD file:
Must contain a concise and clear statement articulating your answers to the questions asked on page 481.

a. Do buyers pay a premium for a brick house, all else being equal?

b. Is there a premium for a house in neighborhood 3, all else being equal?

C. Is there an extra premium for a brick house in neighborhood 3, in addition to the usualpremium for a brick house?

d. For purposes of estimation and prediction, could neighborhoods 1 and 2 be collapsedinto a single "older" neighborhood]