Case Study 3.3 Due to a crisis in subprime lending, obtaining a mortgage has become difficult even for people with solid credit. In a report by the Associated Press (August 25, 2007), sales of existing homes fell for a 5th consecutive month, while home prices dropped for a record 12th month in July 2007. Mayan Horowitz, a research analyst for QuantExperts, wishes to study how the mortgage crunch has impacted the once-booming market of Florida. He collects data on the sale prices (in $1,000s) of 25 single-family homes in Fort Myers, Florida, in January 2007 and collects another sample in July 2007. For a valid comparison, he samples only three-bedroom homes, each with 1,500 square feet or less of space on a lot size of 10,000 square feet or less.
Calculate descriptive statistics: the mean, median, mode, and standard deviation in the two sample periods (January and July).
Discuss one of the following:
- What changes occurred in the Fort Myers housing market during the 6-month period?
- What conclusions can you draw from the data?
- What additional data might you want, to understand the housing market better?
- What role do descriptive statistics play in understanding the housing market?