Impact of Mortgage Crunch Toward House Market of Florida
Impact of Mortgage Crunch toward House Market of Florida
INTRODUCTION
According to a report by the Associated Press (August 25, 2007), sales of existing homes have fell for a 5th consecutive month, and house prices dropped for a record 12th month in July of 2007. Also according to the Associated Press, obtaining a mortgage has been difficult for everyone, even those with a solid credit. All of this is due to the crisis in subprime lending. This study is conducted to compare and contrast the data collected on January 2007 and July 2007, and to study how large the prices change in the market, and the impact of mortgage crunch has on the once booming market of Florida.
METHODOLOGY
To study the change in the house prices in the market of Florida, data has been collected on the sale prices (in $1000s) of 25 single-family homes in Fort Myers, Florida, in January 2007, and another sample was collected in July of 2007. In order for the comparison to be valid, the samples were only from three bedroom homes, each with 1,500 square feet or less of space on a lot size of 10,000 square feet or less.
To determine the change between the data set of January 2007, and July 2007, we must take a look at the sales prices during the two dates, and the differences between those two data.
ANALYSIS AND RESULTS
To determine the change between the data set of January 2007, and July 2007, we must take a look at the sales prices during the two dates, and the differences between those two data.
Sale Prices in Fort Myers, 2007 (in $1,000s)
January
231.08
182.72
Median
205.00
180.00
220.00
210.00
Standard Deviation
111.40
69.38
Maximum
610.00
400.00
Minimum
100.00
86.00
Range
510.00
314.00
Table 1. Descriptive Summary of Sale Prices in Fort Myers, Florida, 2007
According to Table 1, the average of sales prices (in $1000s) in January 2007 is 231.08, which is greater than the average of sales prices in July 2007, which are 182.72. The sales price has decreased by 48.36 from January 2007 to July 2007. Both home prices of January and July 2007 have over 50% of its home prices lower