A state reappraises real estate every year, so the county appraiser\'s website l

Question

A state reappraises real estate every year, so the county appraiser's website lists the current "fair market value" of each piece of property. Property usually sells for somewhat more than the appraised market value. Here are the appraised market values and actual selling prices (in thousands of dollars) of condominium units sold in a beachfront building in a 137-month period between 2003 and 2014. Selling Price Appraised value Month Selling Price Appraised value Month

834 635 0 1059 783 79 599 501 1 614 479 86 1084 939 3 684 554 88 899 799 9 702 699 93 854 657 13 369 699 94 1109 951 14 1464 1141 96 724 354 15 1077 876 99 1334 1041 19 1244 1018 100 709 565 21 1092 610 101 1331 888 26 1209 913 109 1909 1025 26 659 514 110 1609 1049 28 1009 886 113 989 451 34 1109 904 118 949 780 37 558 490 119 859 724 47 1414 831 120 1109 1006 54 1009 879 121 1173 962 59 1209 761 124 1434 931 64 1109 687 125 1874 1199 64 964 600 129 1459 619 64 1209 897 129 884 815 64 909 859 129 1519 1250 70 834 525 134 1384 822 70 895 635 137 569 505 73

Here is part of the output for regressing selling price on appraised value, along with prediction for a unit with appraised value $800,000. Predictor Coef SE Coef T P Constant 110.0 124.5 0.88 0.382 Appraisal 1.2103 0.1540 7.86 0.000 S = 221.341 R-Sq = 57.9% R-Sq(adj) = 56.9% Predicted Values for New Observations New Obs Fit SE Fit 95% CI 1 1078.2 32.4 (1013.0, 1143.5) What is the equation of the least-squares regression line for predicting selling price from appraised value? (Enter your intercept to one decimal place and your slope to four decimal places.) price = + × appraised value

Explanation / Answer

Result:

Here is part of the output for regressing selling price on appraised value, along with prediction for a unit with appraised value $800,000.

Predictor Coef SE Coef T P

Constant 110.0 124.5 0.88 0.382

Appraisal 1.2103 0.1540 7.86 0.000

S = 221.341 R-Sq = 57.9% R-Sq(adj) = 56.9%

Predicted Values for New Observations New Obs Fit SE Fit 95% CI 1 1078.2 32.4 (1013.0, 1143.5) What is the equation of the least-squares regression line for predicting selling price from appraised value? (Enter your intercept to one decimal place and your slope to four decimal places.)

price =110.0 + 1.2103 × appraised value

when appraised value $800,000

predicted price =110.0+1.2103*800

=1078.24( in thousands of dollars).

Or $ 1078240

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