Brooklyn home prices for single-family homes and condos likely increased significantly in Q4 2020 compared to Q3 2020. Using linear regression, I found a statistically significant positive effect at a 97.5% confidence level. While some model assumptions were violated and the confidence interval is wide, the overall trend suggests a price increase.
This analysis explores the change in prices for single-family homes and condos in Brooklyn between Q3 and Q4 of 2020, a period heavily influenced by the COVID-19 pandemic. Understanding these changes offers insights into the housing market's health in Brooklyn.
- Source: Sales data for Brooklyn single-family homes and condos from 2016 to 2020.
- Filtering: Excluded homes sold for less than $10,000, more than $6,000,000, and certain atypical housing types (e.g., Cape Cods, mansions).
- Final Dataset: 13,474 sales records.
- Initial Analysis: Comparing average prices between quarters could be misleading due to variations in the types of homes sold.
- Modeling Strategy: A linear regression model was used to control for factors such as ZIP code, neighborhood, square footage, building classification, and sale timing.
- Model Construction:
- Variables included ZIP code, neighborhood, gross and land square footage, building classification, and sale timing.
- ZIP codes were grouped using Tukey’s test; neighborhoods were grouped by mean purchase prices.
- Performance:
- The model explains 61% of the variation in prices, with a root mean squared error of $445,177.40.
- The estimated increase in Q4 2020 prices over Q3 2020 is $70,459, significant at the 97.5% level.
-
Limitations:
- The wide confidence interval ($8,859.37 to $132,059.50) may result from small sample sizes in Q3 and Q4 2020.
- The model's assumptions of independent and identically distributed errors were violated.
-
Conclusion: Despite limitations, the analysis strongly suggests that Brooklyn home prices increased in Q4 2020. While the exact amount is uncertain, the trend is clear.