PART II: Regression Analysis and Model Building (80 points)
The Condo Sales Case
This case involves an investigation of the factors that affect the sale price of Oceanside condominium units. It represents an extension of an analysis of the same data by Herman Kelting (1979). Although condo sale prices have increased dramatically over the past 20 years, the relationship between these factors and sale price remain about the same. Consequently, the data provide valuable insight into today’s condominium sales market. The sales data were obtained for a new oceanside condominium complex consisting of two adjacent and connected eight-floor buildings. The complex contains over 200 units of equal size (approximately 500 square feet each). The locations of the buildings relative to the ocean, the swimming pool, the parking lot, etc., are shown in the accompanying figure. There are several features of the complex that you should note: Figure 1: Layout of condominium complex
1. The units facing south, called ocean view, face the beach and ocean. In addition, units in building 1 have a good view of the pool. Units to the rear of the building, called bay-view, face the parking lot and an area of land that ultimately borders a bay. The view from the upper floors of these units is primarily of wooded, sandy terrain. The bay is very distant and barely visible. 2. The only elevator in the complex is located at the east end of building 1, as are the office and the game room. People moving to or from the higher floor units in building 2 would 3
likely use the elevator and move through the passages to their units. Thus, units on the higher floors and at a greater distance from the elevator would be less convenient; they would require greater effort in moving baggage, groceries, and so on and would be farther away from the game room, the office, and the swimming pool. These units also possess an advantage: there would be the least amount of traffic through the hallways in the area...
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