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    Analysis of multiple city-level housing market trends

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    In this activity you will need to go to the realtor.com website. Follow the instructions for "Finding a Home", and check housing prices for a 3-bedroom, 2-bath house in several cities, for example, San Francisco, CA; Topeka, KS; Dallas, TX; Concord MA; and Seattle, WA. Explain why housing prices vary from city to city. Clearly explain how supply and demand affect the prices of the homes and be sure to show your work.

    *Objectives: Identify current trends in macro and microeconomics. Use supply and demand to analyze business activities to formulate business plans. Fully complete all steps in the directions above.

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    Solution Preview

    Please see the attached file for my solution - it contains color-coded text, a graph, and some special formatting that can't be reproduced in this text box. However, for those unable to open document files, I am pasting the solution below (I'm not sure how well the formatting will hold up - so I always recommend the free OpenOffice software to those without MS Office/Word):

    Location Price of 3BR/2BA
    San Francisco, CA $489,000 - $700,000
    Topeka, KS $10,800 - $132,500
    Dallas, TX $20, 000 - $500,000

    Note: This is a very unscientific method, with great price ranges and selection bias in the sample. You should really just use HUD data to see average prices based on a representative sample, in my opinion.

    Prices vary between cities for many reasons. One is that demand is simply higher or lower in some locations, due to a plethora ...

    Solution Summary

    This is a research activity wherein a person gathers housing data for several cities and analyzes the market conditions. It is a very creative assignment, in that it is equally applicable to Real Estate, Economics, and Business Planning courses. Specifically, the OTA uses Neoclassical economic principles to explain the raw data he presents, then explains how certain predictions should be integrated into a business plan. Moreover, the OTA provides commentary on how a researcher (e.g. a social scientist, financial planner, developer, etc) could improve on the methodology that is given in the instructions. This enables students to understand the dynamics and limitations of certain methods of research, and to obtain a more in-depth understanding than most undergraduates would have on their own. A plain text copy of the answer is also provided, but the OTA recommends using the Word file - it contains a special graph, color-coded text, etc.