Question: The data in the File San Diego Housing Demand represents the demand for single family housing in a metropolitan area from 1980 - 2002. The data are coded as follows:

Quantity = Number of single family housing units sold in a year

Population = population of the metropolitan area in thousands

Price = average price of single family housing per square foot

Income = median income in the area in thousand $’s.

Rent = average rent for apartments in the area

(Note: Price, Income, and Rent data are adjusted for inflation)

Use the data and a regression model of your choice to estimate the demand for single family housing in the metropolitan area.  Write a brief report which includes the following:

1. Why the model of your choice is the best model. Analyze the validity of the model, including a discussion of the R ² , adjusted R ² , t-tests and p-values. How would you use the estimated model to predict sales of single family housing in 2003.
2. Calculate the elastcities for price, income, and rent. How do you interpret these elasticities?
3. Use the estimation results in your role as a consultant to a land development company to answer the following questions:

i. Should the company increase price of the houses it sells?

ii. How will a slowing in the local economy, resulting in a 10% decline in income, affect the demand for the housing?

iii. A commercial developer is building many apartments in the same vicinity as the single family homes. Should builders of single family homes be concerned?

Price: $2.99

Solution: The downloadable solution consists of 9 pages
Deliverable: Word Document