Question

Read the short Excerpt, from the February 16^th issue of Business Week, 2017“Housing: Guess who’s playing watchdog”; then address the following issues/concerns

Home appraisers played one of the less well-known roles in pumping up home values and contributing to the current financial crisis. Retained by lenders or brokers, they frequently colluded – explicitly or tacitly – in overestimating the worth of houses to justify large mortgages and the lucrative fees each member of the real estate food chain received at closing. Faced with investigations, lawsuits, the home-finance industry has agreed to a government – approved code of conduct for appraisals that take effect on May 1. The new rules promote the use of middlemen between the nation’s 60,000 freelance appraisers and the lenders and brokers. The middlemen, known as appraisal management companies, or AMCs are supposed to prevent lenders and brokers from pressuring appraisers to exaggerate assessments. But ….some of the same subprime players that helped inflate the real estate bubble in the first place.

1. How do you propose to Model a Demand for Housing Function? Be sure to include the variables that you think are most appropriate to include
2. Specify that function as in an estimable Regression equation
3. What data would you collect?
4. What sorts of hypotheses will you test? Set up such tests.
5. How will you conclude from your test that your hypotheses are good or bad?

Answer 1