Many people dream of having a home with an ocean view from their home. Being able to walk onto your patio, sit, and admire a sunset sound like a scene in a Nicholas Sparks’ novel. So it should come to no surprise that homes with a scenic ocean view can demand a high price in the real estate market. Below you will see just how different the price from a sample of Florida condominiums sold with and without views of the Gulf of Mexico can demand. The Gulf Real Estate Properties, Inc has provided data from 58 condominiums they have sold. The sample is broken up into 40 condominiums with Gulf of Mexico views, and 18 without.
Module 5: Gulf Real Estate Properties
Mean
“The mean is the average of the numbers. In other words it is the sum divided by the count,” (Math is Fun, 2014).
Finding the mean of each sample of data is rather easy, you add them up and divide by the sample size. In every category the condominiums with a view out performed the other condominiums. The mean of the Gulf View Condominiums’ List Price and Sale Price are higher, and the number of days it takes to sell the home is less. To simplify the Gulf View Condominiums sell for more and quicker. Gulf View Condominiums have a mean price of 600.73, while No Gulf View Condominiums have a mean of 204.95. The difference between these two numbers could be argued that Gulf of Mexico views can increase a home’s selling price by almost three times its current asking price. Like the List Price the Sale Price mean favors the Gulf View Condominiums. The average Sale Price of the Gulf View Condominiums is 578.86, whereas the No Gulf View Condominiums have an average of 196.43.
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The one statistic that No Gulf View Condominiums do not want to be higher than the Gulf View Condominiums is the one statistic that they are higher on. When you are trying to sell a home, you do not want it to take forever. The No Gulf View Condominiums take a mean of 237.45 days to sell, compared to Gulf View Condominiums taking only 184.9 days. That is a difference of 52.55, or a week shy of two months more to sell a condominium. When you look at the difference of the List Price subtracted by the Sale Price, a real estate agent could make it look in favor of the Gulf View Condominiums. The Gulf View Condominiums have a difference of 21.87, whereas the No Gulf View Condominiums is only 8.52.
This difference makes it look like No Gulf View Condominiums sell closer to their list price, but this is untrue. Instead of subtracting the mean Sale Price from the List Price, and you divide the Sale Price by the List Price you get the percentile of the difference. In doing this you learn that on average the Gulf View Condominiums retain 96.36% of their listing price, where as the No Gulf View Condominiums only retain 95.85%. So not only do the gulf view homes list and sell for more quickly but they also sell closer to their list value.
Mode
“The mode is the value that occurs with the greatest frequency,” (Fundamentals of Business Statistics, 2011).
The only category that both the condominiums have a mode in is the List Price. No Gulf View Condominiums have a mode List Price of 203 and Gulf View Condominiums have a mode of 336. This information could be used to skew information showing that the List Price between the two categories is closer than they actually are.
Range
The range of data is the largest value subtracted with the lowest value. The range can show the vast difference between homes. The Gulf View Condominiums have significantly higher List Price and Sale Price. This is reasonable conclusion as Gulf View Condominiums have created a more “dream home,” market. The Gulf View Condominiums List Price and Sales Price are 819 and 813.3, compared to No Gulf View Condominiums 168 and 160.9. Another way to show the extreme price range of the Gulf View Condominiums comparing the fact that the No Gulf View Condominiums highest selling home is a List Price of 299 and Sales Price of 282.6, and the Gulf View Condominium is 974 and 958.4 respectively.
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That is well over three times the value of No Gulf View Condominiums highest selling condominium. Days to Sell are the one range that is similar, although it still by far favors the Gulf View Condominiums. Gulf View Condominiums have a range of 252, whereas the No Gulf View Condominiums is 339. This makes a difference of 87; almost three months higher for No Gulf View Condominiums. This means property owners without a Gulf of Mexico view should be prepared that if they sell their home it could sit significantly longer on the market.
Median and Inter-quartiles Range
The inter-quartile range is away to overcome extreme values in the data. The second inter-quartile is also the median. The median for our sample is the average of the middle two observations in any column. The inter-quartile range is another tool that shows the discrepancy between the two condominiums. The Gulf View Condominiums first inter-quartile’s List Price and Sale Price is higher than the No Gulf View Condominiums fourth inter-quartile respectively. This shows that the bottom 25% of the Gulf View Condominiums are out listing and selling all of the No Gulf View Condominiums.
In all of the Days to Sell inter-quartiles ranges Margin of Error
With a margin of error you are essentially trying to find out how big of a change your calculations can be off. Think of senators in Congress. Every state has two senators, and if both senators in Colorado voted “yes,” on a bill does that mean every person residing in Colorado wanted that bill to pass? No, what it would mean, hopefully, is that the majority of the state would want it to pass. One way that you can assist in making a margin of error being more accurate is by making the sample size closer to the population. For example, Colorado’s House of Representatives would be more likely to vote accordingly with its state’s population than the Senate because it has seven representatives versus two. Unfortuanetely in our condominium war both the List Price and Sale Price margin of error is higher with Gulf View Condominiums.
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Despite Gulf Real Estate Properties Inc providing more data for the Gulf View Condominiums, these condominiums had a larger margin of error than the No Gulf View Condominiums. The reason for this is the fact that the List and Sale Price range of Gulf View Condominiums were also so much more spread out. The only area in the margin of error field that the Gulf View Condominiums beat the No Gulf View Condominiums is in the Days to Sell, this makes sense as Gulf View Condominiums proved a larger sample size and a smaller Days to Sell range for the calculations.
Problem Solving
For the branch managers desired sample size I came up with a sample size of 31 for the Gulf View Condominiums, and a sample size of 14 for the No Gulf View Condominiums. As for what the two List Price should sell for I found the Gulf View to sell for approximately $567,562 and the No Gulf View to sell for $273,156.
Conclusion
While the No Gulf View Condominiums did have a smaller margin of error in almost every other category they were less successful. It comes as no surprise that ocean view properties would out sell non-ocean view properties in Florida. The good news for Gulf Real Estate Properties Inc is that this gives them opportunities of investment on properties. If the company was asked to sell a property that was in the lower inter-quartile, they could potentially purchase it themselves, remodel it, and sell if for a price closer to their third inter-quartile. Also, the information gathered regarding the price discrepancies between the two groups can help real estate agents direct future clients to specific homes based on their wants, needs, and price points.
References
Math is Fun. (2014).
How to Find the Mean. MathisFun.com. Retrieved from http://www.mathsisfun.com/mean.html Sweeney, D., Williams, T., & Anderson, D. (2011).
Measures of Location. Fundamentals of Business Statistics 6th Edition. South-Western Cengage Learning.
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