Course Project:

Students,working individually (discouraged but allowed) or insmallgroups (preferred),willusemethods studiedinthiscoursetoaddressarealproblem. Your analysis need not be econometric. Our course project pertains to the economics of real estate. You may select a topic related to real estate that interests your group. Here are a couple:

1. How does new construction and/or remodel construction in a neighborhood affect home prices? Is construction a leading indicator for future higher prices for local residents in neighborhoods undergoing construction? Does the construction of new homes tend to pass-through a price increase to existing nearby homes?

• What neighborhoods or areas in Los Angeles are experiencing the “hottest” real estate markets? Which neighborhoods or areas are likely to become the next hot market? Which neighborhoods have shown the greatest price increase and what are the factors that lead to price appreciation? Which neighborhoods represent the best likelihood for capital gains if you are an investor?

• Where should a high-end coffee chain add new stores in Los Angeles? For example, if you were advising Starbucks where would locate new stores? Is there a relationship between store locations and neighborhood affluence?

• What is the role of the real estate agency? Do certain customers select certain agencies because of characteristics of their transactions (low prices = Century 21)? Do certain agencies outperform others for buyers or sellers?

• Produce an estimate of the total value of the housing stock by neighborhood. For example, what is the current value of all homes in zipcode 90272 (or a neighborhood within 90272). How has this number changed year after year? How has this change been affected by sales of new homes? One possibility is that the neighborhood increases in value only from the sale of the new home and given that debt has presumably increased as well, there is no real change in wealth. Another possibility is that there is spillover effect wherein the sale of a new home creates additional wealth for the neighbors. Can you measure this?

Groups may not exceed seven students. Eachgroupmustformulateaproblem or topic that is approved by the Professor. Group projects will be graded according to effort and completeness.

Projectdescription:

Youare expectedtoworkonthisprojectthroughoutthesemester(especiallyimportanttoidentifyanydataavailabilityproblemsearly,andpossiblypickadifferenttopic).You must submit your group project description to BB by the due date on the syllabus (one submission per group).Thisshouldbea minimumone-pagedescriptionoftheproblemyouwillbeaddressing(i.e.,yourresearchquestion),theexpecteddependentvariable,aninitialcausalmodel,adescriptionofthedatayouplan to use,andsourcesofthose data. Or if a non-econometric solution, please describe your methods (theory, empirical review, interviews, or whatever you will be doing).

Yourwrittenpapershouldbemodeledafteraclient-focused report. It should include the followingsections(in the ordergiven here):

• Aone-pageexecutivesummary. Thesummaryshouldreviewthequestion motivatingtheanalysisand the major findings.
• Abackgroundsectionthatdescribesthemotivationfortheanalysis,includinginformationon the problemyouareaddressing,and thecontext.
• A literaturereviewof the relevantresearch.
• Adata section thatdescribesthedatausedindetail,thesourcesofthedata,howtheywerecollected,and their reliability.Anylimitations of thedata should be describedhere.
• Amethods section that describes the methodologyemployedandwhyit is appropriate.
• Aresultssectionthatdescribestheresultsofyouranalysisandanylimitations/concernsaboutthevalidityofyouranalysis.
• Animplications/conclusionsectionthatdevelopstheimplicationsofyouranalysisfortheproblem or questionyou are addressing.

A references section thatidentifies the sourcesof all materialscited inyourpaper.

Thereport must not exceed 20 pages (double-spaced, 12 point TimesNewRoman font, 1-inchmargins, etc.), not includingthe executive summary, references, and technical appendices. You need to turn in one copyper group on blackboard and send out a digital copy of the same to the TA on the day of your presentation. Details of presentation will be communicated to you during the semester.