Managerial Report on the Real Estate - Essay Example

Managerial Report on the Real Estate Introduction The matters dealing with purchase, renting and sale of land and the structures over it are often termed as Real Estate. A series of structured real estate may include entire buildings, individual houses, condominiums, town houses etc. The current research focuses specifically on real estate with respect to condominiums. In order to focus our research a company centering specifically on the real estate relative to condominiums, “Gulf Real Estate Properties”, has been chosen for study. A real estate company native to southwest Florida, the Gulf Real Estate Properties proves its mettle in the real estate arena by making sound practical research regarding condominiums. This, they accomplish by collecting on site data, monitoring information relative to the sale and purchase of condominiums. The number of days it takes for each condominium to be sold is also taken into account and recorded for analysis and reference. The Gulf Real Estate Properties has classified the condominiums by separating those present on the areas of the Gulf from those present elsewhere such as on the bay or a golf course. The data relative to the recent sales of Condominiums both on and off Gulf, which is in thousands of dollars, has been selected. Statistical analysis of the acclaimed data would reveal facts which would be accommodated within a managerial report. Data The data comprise of three variables namely list price, sale price and days to sell for both the categories of condominiums that are “Gulf View” and “No Gulf View”. The sample size for former is 40 while for the latter it is 18. The price values are given in thousands of dollars. The data is acquired from condominium sales reported in the Naples MLS (Coldwell Banker, June 2000). The data is appended below as Table 1.1 under Appendix A. The subscripts that are used to indicate the statistical figures of both the “Gulf View” and “No Gulf View” categories in this report are 1 and 2 respectively. Statistical Findings and Discussion Descriptive Statistics: The descriptive statistics regarding each of the three variables for the 40 “Gulf View Condominiums” and for the 18 “No Gulf View Condominiums” is presented in Table 1.0 below. The descriptive statistics highlight multiple factors that would assist a real estate agent comprehend the real estate market. The sample mean of days to sell variable for Gulf View Condominiums (= 106 days) is comparatively lesser than the sample mean of No Gulf View Condominiums (= 135 days). This apparently shows that the condominiums located directly beside the Gulf of Mexico are sold in lesser time than those that are not. Despite the fact that the sample mean values of price variables for Gulf View Condominiums are higher than the other category condominiums it seems that the Gulf View Condominiums are quicker and easier to sell. This fact is asserted by the sample standard deviation values (= 52.22 & = 76.3) of both the samples by highlighting the fact that the sample mean of “Days to sell” variable (= 106 days) for Gulf View Condominium represents the sample data with more consistency and lesser dispersion. The margin of error for No Gulf View category is also higher as compared to the Gulf view category due to higher standard deviation value. Further analysis along with interval estimations is presented in the next section. Table 1.0 Descriptive Statistics of each of the three variables Descriptive Statistics Gulf View Condominiums No Gulf View Condominiums List Price Sale Price Days to sell List Price Sale Price Days to sell Mean 474.01 454.22 106.00 212.81 203.19 135.00 Standard Error 31.19 30.44 8.26 11.54 10.35 17.98 Median 437.00 417.50 96.00 212.50 203.50 126.00 Mode 975.00 305.00 85.00 279.00 179.00 #N/A Standard Deviation 197.29 192.52 52.22 48.95 43.89 76.30 Sample Variance 38923.36 37063.09 2726.51 2395.64 1926.48 5821.65 Range 805.10 810.00 254.00 174.00 157.00 290.00 Minimum 169.90 165.00 28.00 148.00 135.50 48.00 Maximum 975.00 975.00 282.00 322.00 292.50 338.00 Sum 18960.30 18168.90 4240.00 3830.50 3657.40 2430.00 Count 40.00 40.00 40.00 18.00 18.00 18.00 Confidence Level (95.0%) 63.10 61.57 16.70 24.34 21.83 37.94 Interval Estimation Since the population means and for both the sample are unknown, the t-distribution is used for interval estimation. The interval is given by . As per the calculated figures for margin of error given in Table 1.0, the 95% confidence interval estimates of the population mean sales price and population mean days to sell for Gulf View condominiums and No Gulf View condominiums are calculated below respectively. Interval Estimates for Gulf View Category: The point estimate of population mean sales price is $454.22K and margin of error of sales price is $61.57K. Thus the 95% confidence interval is $392.65K to $515.79K. The point estimate of population mean number of days to sell is 106 days and margin of error of sales price is 17 days. Thus the 95% confidence interval is 89 to 123 days. Interval Estimates for No Gulf View Category: The point estimate of population mean sales price is $203.19K and margin of error of sales price is $21.83K. Thus the 95% confidence interval is $181.36K to $225.02K. The point estimate of population mean number of days to sell is 135 days and margin of error of sales price is 38 days. Thus the 95% confidence interval is 97 to 173 days. The interval estimate for population mean of number of days to sell for No Gulf View condominium is clearly right shifted as compared to the interval estimate of same variable for Gulf View category. Sample size determination: In order to calculate sample size we need to use the formula, . Since the population standard deviation σ is unknown the rough approximation of σ can be done by dividing the range by 4. Therefore, for the selling price of Gulf View condominiums the population standard deviation is calculated as 202.5 and for the selling price of No Gulf View condominiums the population standard deviation is calculated as 39.25 (Refer Table 1.0 respective range values). The determined sample size for Gulf view condominiums with E = $40K and using 95% confidence interval is n . The determined sample size for No Gulf view condominiums with E = $15K and using 95% confidence interval is n . Therefore the recommended sample sizes for Gulf View and No Gulf View categories are 99 and 26 respectively. Estimation For a Gulf View condominium with a list price $589K, with the 95% confidence interval the selling price should lie between $392.65K and $515.79K, whereas the number of days required to sell should lie between 89 and 123 days. For a No Gulf View condominium with a list price $285K, with the 95% confidence interval the selling price should lie between $181.36K and $225.02K, whereas the number of days required to sell should lie between 97 and 173 days. Conclusion The analysis concludes with the results that the Gulf View condominiums are better deals than the No Gulf View condominiums. They are quicker to sell despite of being of higher prices. The recommended sample size for Gulf View and No Gulf View categories are 99 and 26 with the error margins of selling price $40K and $15K respectively. The selling prices are observed to be always lesser than the respective list prices. Therefore an analysis should also be conducted in order to estimate the likely comparative drop in these prices. REFERENCES Anderson, D. R., Sweeney, D. J., & Williams, T. A. (2011). Statistics for business and economics. Mason, Ohio: South-Western/Cengage Learning. Christou, N., & Dinov, I. D. (2011). Confidence Interval Based Parameter Estimation—A New SOCR Applet and Activity. Plos ONE, 6(5), 1-18. doi:10.1371/journal.pone.0019178 Chan, N., Li, D., & Peng, L. (2012). TOWARD A UNIFIED INTERVAL ESTIMATION OF AUTOREGRESSIONS. Econometric Theory, 28(3), 705-717. doi:10.1017/S0266466611000727 Levine, D. M. (2008). Statistics for managers using Microsoft Excel. Upper Saddle River, N.J: Pearson Prentice Hall. Govindarajulu, Z. (1981). The sequential statistical analysis of hypothesis testing, point and interval estimation, and decision theory. Columbus, Ohio: American Sciences Press. Levine, D. M., Ramsey, P. P., & Smidt, R. K. (2001). Applied statistics for engineers and scientists: Using Microsoft Excel and MINITAB. Upper Saddle River, N.J: Prentice Hall. Appendix A Table 1.1 Sales Data for GULF REAL ESTATE PROPERTIES Gulf View Condominiums No Gulf View Condominiums List Price Sale Price Days to sell List Price Sale Price Days to sell 495 475 130 217 217 182 379 350 71 148 135.5 338 529 519 85 186.5 179 122 552.5 534.5 95 239 230 150 334.9 334.9 119 279 267.5 169 550 505 92 215 214 58 169.9 165 197 279 259 110 210 210 56 179.9 176.5 130 975 945 73 149.9 144.9 149 314 314 126 235 230 114 315 305 88 199.8 192 120 885 800 282 210 195 61 975 975 100 226 212 146 469 445 56 149.9 146.5 137 329 305 49 160 160 281 365 330 48 322 292.5 63 332 312 88 187.5 179 48 520 495 161 247 227 52 425 405 149 675 669 142 409 400 28 649 649 29 319 305 140 425 410 85 359 340 107 469 449 72 895 875 129 439 430 160 435 400 206 235 227 91 638 618 100 629 600 97 329 309 114 595 555 45 339 315 150 215 200 48 395 375 135 449 425 53 499 465 86 439 428.5 158 Source: Coldwell Banker June 2000. Read More