WhyCan’tIAffordaHouse-UCSBEconomics.ppt

Why Can’t I Afford a Home? By: Philippe Bonnan Emelia Bragadottir Troy Dewitt Anders Graham S. Matthew Scott Lingli Tang Organization Time Series Regression United States: Ten year regression of explanatory variables against median price of a home Organization Cross Section Regression 14 Different Areas for 2 separate years: 2000 and 2005 The Variables Median Price of a Home (dependent variable) β1= Unemployment Rate β2= Median Family Income β3= Building Permits β4= Population β5= Distance from the coast (Not applicable for Time-Series) Β6= Mortgage Rates (Not applicable for Cross-Section) Graphical Relationships The following graphs compare the median price of a home with each variable over a period of ten years Each variable uses 1996 as an index for comparison (For each variable, the value for 1996 is set to 1) Unemployment Rate Median Family Income Building Permits Population Mortgage Rates Our Hypothesis Ho: The explanatory variables in the regression don’t explain the median price of a home i.e. β1= β2= … =βn=0 Ha: At least one explanatory variable explains the median price of a home i.e. β1≠0 or β2≠0 … or βn≠0 Results for Time Series Analysis (U.S.) Time Series Analysis – Correlation Matrix Time Series Regression Dependent Variable: PRICE Method: Least Squares Date: 12/06/06 Time: 09:38 Sample: 1 10 Included observations: 10 Variable Coefficient Std. Error t-Statistic Prob. HOMEMORTGAGERATE 632665. 1151196. 1.418234 0.2291 INCOME -6.116375 6.401278 -0.955493 0.3934 PERMITS 0.092208 0.056354 1.636246 0.1771 POPULATION 0.006230 0.004887 1.274867 0.2714 UNEMPLOYMENTRATE 1033710. 358705.7 2.881777 0.0449 C -1622644. 933044.8 -1.739085 0.1570 R-squared 0.990920 Mean dependent var 153950.0 Adjusted R-sq. 0.979571 S.D. dependent var 34063.41 S.E. of regression 4868.733 Akaike info criterion 20.10276 Sum squared resid Schwarz criterion 20.28