DR.

GARY

BLISS

FALL

2012

2011-2012 HOUSING M A R K E T A N A LY S I S
A STATISTICAL INVESTIGATION

PREPARED

BY:

ANNA

PARISH

2011 2012 Housing Market Analysis A Statistical Investigation

FOREWORD AND PURPOSE The purpose of this report is to analyze the housing market in Bay County, FL with regards to the home sales of 2011 and January through October of 2012. It is a crosstabulation used to determine whether the Bay County home sales are rising or declining and what the market trends are, if any. All of the 2012 data collected for this analysis was obtained from the Bay County Property Appraiser website: http://qpublic6.qpublic.net/fl_search_dw.php?county=fl_bay. The 2012 sample size consists of 954 observations. The 2011 Home sales data was retrieved by Dr. Gary Bliss. The 2011 sample size consists of 365 observations. The variables used in this investigation are the selling price of the home, heated square footage, acreage (if any), number of bathrooms, number of bedrooms, the age of the building (according to the effective year built), and the city of the propertys physical standing. All of these variables were used to determine certain trends and inferences about the 2012 housing market in reference to the 2011 market. For the purpose of this sampling and analysis, the areas of Bay County have been broken down into five separate regions. These regions are defined as follows: Region 1 Panama City Beach Region 2 Panama City Region 3 Lynn Haven Region 4 Callaway, Springfield, and Parker areas Region 5 All other areas of Bay County 2011 HOME SALES

2011 2012 Housing Market Analysis A Statistical Investigation These data illustrate the price ranges for the homes in Bay County, Florida for 2011 shown here in increments of $50,000. According to this analysis, most of the homes were sold in the $100,000 to $149,999 range. Most homes were sold under $500,000 will few exceptions. 2012 HOME SALES

2012 Property Sales Prices

Number of Homes
0.250 0.200 0.150 0.100 0.050 0.000

Sales Price

These data illustrate the price ranges for the homes in Bay County, Florida for 2012 shown here in increments of $50,000. According to this analysis, most of the homes were sold in the $100,000 to $149,999 range. Nearly all homes sold in 2012 were sold under $400,000 with a few exceptions. The comparison of these data analyses demonstrate that the overall average selling price of homes in Bay County, Florida have slightly decreased in the past year.

2011 2012 Housing Market Analysis A Statistical Investigation

D E S C R I P T I V E S TAT I S T I C S O F H O M E S

2011 Statistics
Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness Range Minimum Maximum Sum Count Confidence Level(95.0%) $ $ $ $ $

Sales Price Bathrooms Bedrooms

180,351.78 7,819.70 150,000.00 180,000.00 149,395.21 22318929998 19.581 3.533 1301300 $ 12,000.00 $ 1,313,300.00 $ 65,828,399.00 365 15377.466 2.05 0.03 2 2 0.65 0.43 3.82 1.01 4.5 1 5.5 746.5 365 0.07

2012 Statistics
$ $ $ $ $

Sales Price
171,603.25 3,617.04 152,000.00 115,000.00 111,718.99 12481132251 4.837 1.590 789000 $ 10,000.00 $ 799,000.00 $ 163,709,498.00 954 7098.275

Bathrooms Bedrooms
2.09 0.02 2 2 0.62 0.39 2.19 0.70 4 1 5 1993.5 954 0.04 3.03 0.02 3 3 0.69 0.48 0.87 0.04 5 1 6 2891 954 0.04

Mean 2.87 Standard Error 0.04 Median 3 Mode 3 Standard Deviation 0.71 Sample Variance 0.50 Kurtosis 7.64 Skewness 1.03 Range 7 Minimum 1 Maximum 8 Sum 1049 Count 365 0.07 Confidence Level(95.0%)

In both 2011 and 2012, the average number of bathrooms and bedrooms in the homes sold were relatively unaffected. However, the overall sales prices decreased in 2012 as compared to 2011. This could be an indication of a declining housing market in the coming years. It is also important to notice that the average home price decreased quite significantly from 2011 to 2012. These data also indicate that the standard deviation in 2011 for home price was much higher but this is most likely due to the higher home sales in the sample observations of 2011 leaving it marginally skewed. As is the standard error skewed due to the larger sample size. 2011/2012 -HOME SALES BY REGION

2011 Home Sales

Region % of Total Homes Home Sales ($) Panama City Beach 26.3% $ 24,943,300 Panama City 26.0% 11,170,000 Lynn Haven 14.0% 9,333,300 Callaway, Parker, & Springfield 13.4% 5,937,200 All other Regions 20.3% 14,444,599 Grand Total 100.0% $ 65,828,399

2012 Home Sales

Region % of Total Homes Home Sales ($) Panama City Beach 29.0% $ 58,214,756 Panama City 29.8% 42,684,700 Lynn Haven 21.6% 40,346,700 Callaway, Parker, & Springfield 12.1% 13,048,200 All other Regions 7.5% 9,415,142 Grand Total 100.0% $ 163,709,498

The regions are defined as follows: (1) Panama City Beach (2) Panama City (3) Lynn Haven (4) Callaway, Springfield, and Parker (5) All other regions in Bay County, Florida. In 2011, the properties sold between Panama City Beach and Panama City is reasonably close in number; however, the total amount of sales in Panama City Beach is over double that of Panama City. This indicates Panama City Beach housing is more expensive than that of Panama City. In 2012, the

2011 2012 Housing Market Analysis A Statistical Investigation number of properties sold in Panama City is considerably higher than those in Panama City Beach but, once again, the total sales on the beach are substantially higher. Suggestively, this is also conclusive that the prices in Panama City Beach are higher than those of the surrounding regions again. Taking sample size into account, Lynn Haven, Callaway, Parker, Springfield, and all other regions were moderately different in the average price of homes sold in both years but not significantly. 2 0 1 1 - H Y P O T H E S E S T E S T I NG

2011 Mean Variance Observations Hypothesized Mean Difference df t Stat P(T<=t) one-tail t Critical one-tail P(T<=t) two-tail t Critical two-tail

PCB - Price Other - Price $268,054 $142,812 49028729473 6906226792 50 50 0 63 3.744495776 0.000196914 1.669402222 0.000393829 1.998340543

PCB - SQFT Other - SQFT PCB - Price per SQFT Other - Price per SQFT 1796.84 1606.70 140.48 86.55 407887.6473 327035.8061 5756.665571 1173.035535 50 50 50 50 0 0 97 68 1.568329957 4.581605148 0.060030345 1.01393E-05 1.66071461 1.667572281 0.12006069 2.02786E-05 1.984723186 1.995468931

The hypotheses tests for 2011 are as follows: 1.

Price of Home

In this hypothesis test, I was testing whether or not the mean price of homes in 2011 was the

same in the Panama City Beach region as it was in the other regions of Bay County, Florida. H: - = 0 H: - 0

There is enough evidence at the 5% level of significance to reject the claim that each region will have an equal mean for the price of homes in 2011. 2.

Square Footage In this hypothesis test, I was testing whether or not the mean size of the homes in 2011 was
the same in the Panama City Beach region as it was in the other regions of Bay County, Florida. H: H: - = 0 - 0

There is not enough evidence at the 5% level of significance to reject the claim that each region will have an equal mean for the price of homes in 2011. 3.

Price per Square Foot In this hypothesis test, I was testing whether or not the mean price per square foot for
the homes in 2012 was the same in the Panama City Beach region as it was in the other regions in Bay County, Florida. H: - = 0

2011 2012 Housing Market Analysis A Statistical Investigation H: - 0

There is enough evidence at the 5% level of significance to reject the claim that each region will have an equal mean for the price of homes in 2011.

2 0 1 2 - H Y P O T H E S E S T E S T I NG

2012 Mean Variance Observations Hypothesized Mean Difference df t Stat P(T<=t) one-tail t Critical one-tail P(T<=t) two-tail t Critical two-tail

PCB - Price Other - Price $216,352 $152,674 9033960098 8330268902 50 50 0 98 3.417013262 0.000461608 1.660551217 0.000923216 1.984467455

PCB - SQFT Other - SQFT PCB - Price per SQFT Other - Price per SQFT 1846.44 1757.48 120.14 84.88 377867.8433 350541.4792 4120.537349 1411.933119 50 50 50 50 0 0 98 79 0.737041647 3.3518468 0.231428967 0.000616927 1.660551217 1.664371409 0.462857933 0.001233855 1.984467455 1.99045021

The hypotheses tests for 2012 are as follows: 1.

Price of Home

In this hypothesis test, I was testing whether or not the mean price of homes in 2012 was the

same in the Panama City Beach region as it was in the other regions of Bay County, Florida. H: H: - = 0 - 0

There is enough evidence at the 5% level of significance to reject the claim that each region will have an equal mean for the price of homes in 2012. 2.

Square Footage In this hypothesis test, I was testing whether or not the mean size of the homes in 2012 was
the same in the Panama City Beach region as it was in the other regions of Bay County, Florida. H: H: - = 0 - 0

There is not enough evidence at the 5% level of significance to reject the claim that each region will have an equal mean for the price of homes in 2012. 3.

Price per Square Foot In this hypothesis test, I was testing whether or not the mean price per square foot for
the homes in 2012 was the same in the Panama City Beach region as it was in the other regions in Bay County, Florida. H: H: - = 0 - 0

2011 2012 Housing Market Analysis A Statistical Investigation There is enough evidence at the 5% level of significance to reject the claim that each region will have an equal mean for the price of homes in 2012.

E X P L O R AT I O N O F T H E H Y P O T H E S E S T E S T I NG

Sales Price Square Footage Price per Square Foot

In these hypotheses tests, I was testing whether the average home price, home size, and price per square foot were equivalent or different for the Panama City Beach region as compared to all other regions in both 2011 and 2012. What I found was that in both 2011 and 2012, the mean home price was significantly higher in the Panama City Beach region. This noteworthy price difference is due to the much higher price per square foot in the Panama City Beach region. The higher price per square foot in Panama City Beach makes the total sales in that particular region higher regardless of the number of sales that occurred. The average home size was slightly larger in Panama City Beach in both years as well and it is also shown that the price per square foot in 2011 and 2012 was approximately 62% higher and 42% higher, respectively than the other regions in Bay County.

E X P L A N AT I O N O F T H E A N A LY S I S O F VA R I A N C E Analysis of variance, or ANOVA, is a parametric procedure that, in this case, was used to determine the statistical significance of the difference between the price, square footage, and price per square foot of the five (5) regions being observed. In these analyses, I used the P-value approach as well as the Critical Value approach to determine whether or not the average of the prices, square footage, and prices per square foot are equivalent in the five (5) regions.

2011 2012 Housing Market Analysis A Statistical Investigation

2 0 1 1 / 2 0 1 2 - P R I C E VA R I A N C E A NA LY S I S B E T W E E N R E G I O NS

Regions Panama City Beach Panama City Lynn Haven Callaway, Parker, & Springfield All other Regions Source of Variation Between Groups Within Groups Total Regions Panama City Beach Panama City Lynn Haven Callaway, Parker, & Springfield All other Regions Source of Variation Between Groups Within Groups Total

SUMMARY - 2011 Count Sum Average 96 $24,943,300 $259,826.04 95 $11,170,000 $117,578.95 51 $9,333,300 $183,005.88 49 $5,937,200 $121,167.35 74 $14,444,599 $195,197.28 ANOVA SS df MS 1.17E+12 4 2.92249E+11 6.96E+12 360 19319704211 8.12E+12 364

Variance 5.21E+10 5.663E+09 9.203E+09 4.053E+09 1.121E+10 F P-value F crit 15.127004 1.93E-11 2.396743

SUMMARY - 2012 Count Sum Average 277 $58,214,756 $210,161.57 284 $42,684,700 $150,298.24 206 $40,346,700 $195,857.77 115 $13,048,200 $113,462.61 72 $9,415,142 $130,765.86 ANOVA SS df MS 1.17E+12 4 2.92684E+11 1.07E+13 949 11300088490 1.19E+13 953

Variance 1.218E+10 1.076E+10 1.32E+10 4.491E+09 1.548E+10 F P-value 25.901015 2.12E-20 F crit 2.38131

2011: Using the P-value approach at a 5% level of significance, I can conclude that the average 2011 home price of
the five (5) regions are not equivalent because the P-value (0.0000) a (0.05). Using the Critical value approach, I can also conclude that the average home price of the five (5) regions is not equivalent because F (15.127) F crit (2.397).

2012: Using the P-value approach at a 5% level of significance, I can conclude that the average 2012 home price of
the five (5) regions are not equivalent because the P-value (0.0000) a (0.05). Using the Critical value approach, I can also conclude that the average home price of the five (5) regions is not equivalent because F (74.483) F crit (2.392).

2011 2012 Housing Market Analysis A Statistical Investigation

2 0 1 1 / 2 0 1 2 S Q U A R E F O O TA G E VA R I A N C E A N A LY S I S B E T W E E N R E G I O NS

Regions Panama City Beach Panama City Lynn Haven Callaway, Parker, & Springfield All other Regions Source of Variation Between Groups Within Groups Total Regions Panama City Beach Panama City Lynn Haven Callaway, Parker, & Springfield All other Regions Source of Variation Between Groups Within Groups Total

SUMMARY - 2011 Count Sum Average 96 165,302.00 1,721.90 95 136,286.00 1,434.59 51 90,731.00 1,779.04 49 78,812.00 1,608.41 74 127,056.00 1,716.97 ANOVA SS df MS 6125048 4 1531262.009 1.24E+08 360 344354.1935 1.3E+08 364

Variance 409037.8 288782.6 326792.2 289669 379721 F P-value F crit 4.446765 0.001609 2.396743

SUMMARY - 2012 Count Sum Average 277 507,162.00 1,830.91 284 495,385.00 1,744.31 206 401,322.00 1,948.17 115 174,415.00 1,516.65 72 107,022.00 1,486.42 ANOVA SS df MS 20914324 4 5228581.061 3.79E+08 949 398980.4002 4E+08 953

Variance 396249.5 444013.6 483964.9 205108.3 296007.5 F P-value 13.10486 2.15E-10 F crit 2.38131

2011: Using the P-value approach at a 5% level of significance, I can conclude that the average 2011 square footage
of the five (5) regions are not equivalent because the P-value (0.0016) a (0.05). Using the Critical value approach, I can also conclude that the average home price of the five (5) regions is not equivalent because F (4.447) F crit (2.397).

2012: Using the P-value approach at a 5% level of significance, I can conclude that the average 2012 square footage
of the five (5) regions are not equivalent because the P-value (0.0000) a (0.05). Using the Critical value approach, I can also conclude that the average home price of the five (5) regions is not equivalent because F (61.070) F crit (2.392).

2011 2012 Housing Market Analysis A Statistical Investigation

2 0 1 1 / 2 0 1 2 P R I C E P E R S Q UA R E F O O T A NA LY S I S VA R I A N C E B E T W E E N R E G I O NS

Regions Panama City Beach Panama City Lynn Haven Callaway, Parker, & Springfield All other Regions Source of Variation Between Groups Within Groups Total Regions Panama City Beach Panama City Lynn Haven Callaway, Parker, & Springfield All other Regions Source of Variation Between Groups Within Groups Total

SUMMARY - 2011 Count Sum Average 96 $13,456.29 $140.17 95 $7,549.86 $79.47 51 $5,066.38 $99.34 49 $3,563.42 $72.72 74 $8,535.83 $115.35 ANOVA SS df MS 241195.1227 4 60298.78068 972051.6025 360 2700.14334 1213246.725 364

Variance 6183.183 1192.457 847.6636 717.1414 2681.537 F P-value F crit 22.3317 1.73E-16 2.396743

SUMMARY - 2012 Count Sum Average 277 $31,893.54 $115.14 284 $23,411.62 $82.44 206 $19,805.91 $96.15 115 $8,436.60 $73.36 72 $6,154.20 $85.48 ANOVA SS df MS 216926.4072 4 54231.6018 1816019.549 949 1913.613856 2032945.957 953

Variance 2455.839 1514.222 791.5757 1065.704 5998.87 F P-value 28.33989 2.88E-22 F crit 2.38131

2011: Using the P-value approach at a 5% level of significance, I can conclude that the average 2011 price per
square foot of the five (5) regions are not equivalent because the P-value (0.0000) a (0.05). Using the Critical value approach, I can also conclude that the average home price of the five (5) regions is not equivalent because F (22.332) F crit (2.397).

2012: Using the P-value approach at a 5% level of significance, I can conclude that the average 2012 price per
square foot of the five (5) regions are not equivalent because the P-value (0.0000) a (0.05). Using the Critical value approach, I can also conclude that the average home price of the five (5) regions is not equivalent because F (24.584) F crit (2.392).

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2011 2012 Housing Market Analysis A Statistical Investigation

2 0 1 1 / 2 0 1 2 C O R R E L AT I O N M AT R I C E S

Price Price Square Footage Price per SQFT Acreage Bath Bedroom Age Location 1 0.647961078 0.859881701 -0.019212479 0.565046408 0.31046665 -0.310046368 -0.123883665

Correlation Matrix - 2011 Square Footage Price per SQFT Acreage 1 0.26027211 0.086780737 0.599188637 0.517535242 -0.282091433 0.041899205

Bath

Bedroom

Age

Location

1 -0.062110676 0.412579546 0.117044047 -0.294840434 -0.141558239

1 0.065573967 1 0.088794479 0.531328278 1 0.025622902 -0.479276478 -0.17137682 1 0.138123013 -0.030908417 0.072360366 0.023959254

Price Price Square Footage Price per SQFT Acreage Bath Bedroom Age Location 1 0.685627562 0.609537118 0.072003697 0.527490392 0.468634861 -0.143933251 0.21538609

Correlation Matrix- 2012 Square Footage Price per SQFT Acreage 1 -0.059950115 0.06879313 0.695031226 0.618123087 -0.095514329 0.328812871

Bath

Bedroom

Age

Location

1 0.023081411 1 0.005485702 0.078354712 1 -0.037317396 0.10482544 0.618790943 1 -0.049979926 -0.009997649 -0.189438616 -0.192262405 1 0.005767827 0.205777905 0.126292002 0.260340024 0.202540912

Perfect Positive Correlation Extraordinarily High Positive Correlation Moderately High Positive Correlation
According to these correlation matrices, the price per square foot as well as overall square footage has the highest positive correlation with the selling prices of homes in both 2011 and 2012. Similarly, the bedrooms and bathrooms have a high positive correlation with the homes selling prices in both years as well. It is also relevant to note here that the number of bathrooms is directly correlated to the number of bedrooms correspondingly. and bathrooms had a large positive correlation to the sales price as well. Also, in both years, bedrooms

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2011 2012 Housing Market Analysis A Statistical Investigation

2 0 1 1 / 2 0 1 2 M U LT I P L E R E G R E S S I O N

REGRESSION SUMMARY OUTPUT - 2011

Regression Statistics Multiple R 0.707441335 R Square 0.500473243 Adjusted R Square 0.492101286 Standard Error 106469.5067 Observations 365 ANOVA df SS Regression 6 4.06589E+12 Residual 358 4.0582E+12 Total 364 8.12409E+12 Coefficients Standard Error Intercept -61297.49952 30807.6047 Square Footage 133.140273 12.22419295 Acreage -5600.787183 3738.462345 Bath 65408.1873 12428.41743 Bedroom -23249.36644 9846.130808 Age -267.2689953 310.8734886 Location -12143.79963 3820.980557 Regression Statistics Multiple R 0.765908475 R Square 0.586615793 Adjusted R Square 0.583996674 Standard Error 72056.87008 Observations 954 ANOVA df SS Regression 6 6.97751E+12 Residual 947 4.91701E+12 Total 953 1.18945E+13 Coefficients Standard Error Intercept -13931.58851 13244.54126 Square Footage 104.7358425 5.425943636 Acreage 3769.193389 1468.48094 Bath 28471.38673 5782.414148 Bedroom -7943.297597 4510.654898 Age -646.9721616 123.3944475 Location -9384.547658 1962.365863

MS F Significance F 6.77648E+11 59.77972089 4.54482E-51 11335755850 t Stat -1.989687291 10.89153889 -1.498152627 5.262792924 -2.361269304 -0.859735568 -3.178189329 P-value 0.047385807 4.72538E-24 0.134974799 2.45011E-07 0.018747582 0.390510162 0.00161099 Lower 95% -121884.1206 109.1000221 -12952.89403 40966.30599 -42612.89055 -878.6366898 -19658.18783 Upper 95% Lower 95.0% Upper 95.0% -710.8784485 -121884.1206 -710.8784485 157.1805239 109.1000221 157.1805239 1751.319666 -12952.89403 1751.319666 89850.06861 40966.30599 89850.06861 -3885.842329 -42612.89055 -3885.842329 344.0986992 -878.6366898 344.0986992 -4629.411436 -19658.18783 -4629.411436

REGRESSION SUMMARY OUTPUT - 2012

MS F Significance F 1.16292E+12 223.9745117 8.5885E-178 5192192526 t Stat -1.051873993 19.30278851 2.566729527 4.923788922 -1.761007609 -5.243122155 -4.782261981 P-value 0.293125692 2.88234E-70 0.010418936 1.00113E-06 0.078559822 1.94742E-07 2.00908E-06 Lower 95% Upper 95% Lower 95.0% Upper 95.0% -39923.63219 12060.45516 -39923.63219 12060.45516 94.08757909 115.3841059 94.08757909 115.3841059 887.3404074 6651.04637 887.3404074 6651.04637 17123.55987 39819.21359 17123.55987 39819.21359 -16795.33232 908.7371237 -16795.33232 908.7371237 -889.1303311 -404.813992 -889.1303311 -404.813992 -13235.63606 -5533.459259 -13235.63606 -5533.459259

Most Significant Variable Overall Strength Significant Relationship

C O E F F I C I E NT S O F DE T E R M I NAT I O N

2011: The variables that are not significant in this analysis are the acreage and the age of the property.
The variables highlighted in pink are considered significant in their correlational relationship with home price. These significant variables are the number of bedrooms, the number of bathrooms, and the location of the property.

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2011 2012 Housing Market Analysis A Statistical Investigation It appears that the independent variable with the highest correlation to the sales price in 2011 is the overall square footage which is highlighted in orange. The overall strength of all six (6) variables on the dependent variable (home price) is specified by the R Square (50.0%) and the Significance F (4.54482E-51). Both of which indicate a relatively strong relationship to one another. This means that 50.0% of the variation we see in the sales price of the home sold is found by these six (6) variables.

2012: The variables that are not significant in this analysis are the acreage and the age of the property also.
The variables highlighted in pink are considered significant in their correlational relationship with home price. These significant variables are the number of bedrooms, the number of bathrooms, and the location of the property. It appears that the independent variable with the highest correlation to the sales price in 2012 is the overall square footage as well which is highlighted in orange. The overall strength of all six (6) variables on the dependent variable (home price) is specified by the R Square (58.7%) and the Significance F (8.5885E-178). Both of which indicate a relatively strong relationship to one another. This means that 58.7% of the variation we see in the sales price of the home sold is found by these six (6) variables. This correlation is nearly 10% larger than the R Square of the previous year. Very low Significance F numbers in both 2011 and 2012 indicate a significant and consistent relationship between the independent variables and the dependent variable, home sales price.

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2011 2012 Housing Market Analysis A Statistical Investigation

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