INTRODUCTION
This specific study demonstrates the ability to examine the spatial features as well as specific field-related features to provide an accurate analysis. An important function of real estate is location; the location of a house within a city or country will largely determine its asking price. Spatial analysis in real estate can provide a target consumer, and important factors in determining a fair asking-price such as its connection to the local economy, distance from recreation and entertainment, the safety of the neighborhood, and ward-specific codes.
CASE STUDY
The house actually listed for sale and chosen for analysis was 303 Garfield Avenue, located in the 3rd Ward of Eau Claire, Wisconsin. Our analysis was broken into three scopes: the house, the neighborhood, and the city. For the features of the house and a reference asking price, Zillow.com was used.
303 Garfield Avenue
For the house, a regression analysis was performed using Eviews which accounted for the number of bedrooms and bathrooms, lot size, square footage of property, and an indicator of quality of the interior. These dependent variables possesed an R-squared value of 0.91 (on a scale of 0.0-1.0) which gives the strength of correlation between the above variables listed and our output, the final asking price. The program used the following equation to give an output asking-price:
13670 - 12,001.12 BDRMS + 3627.851 BATHRMS + 2.738 LOTSIZE + 90.45 SQFT + 12,956.05 CHIMNEY=Price
With the correct information for 303 Garfield plugged in, the equation is as follows:
13670 - 12,001.12(3) + 3627.851(1.5) + 2.738(10,018) + 90.45(2,048) + 12,956(1) = $208,735.66
Figure 1 shows some of the property-specific features as listed: 3 bedroms, 1.5 bath, fireplace with chimney, large dining room, vintage hardwood flooring, cherry caninets, granite countertops, newly painted interior, ladscaped garden, 2-car garage, 2,048sqft-unfinished basement, 3rd-floor office/workspace.
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| Figure 1: A peak into 303 Garfield Avenue, Eau Claire, WI |
3rd Ward
The 3rd Ward is a highly-respected neighborhood that is located along the University of Wisconsin-Eau Claire campus. Figure 2 shows this ward's owner profile, where almost all of the surrounding houses are comprised of single family residential.
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| Figure 2: 3rd Ward of Eau Claire, WI |
Although the 3rd Ward comprises campus, it's away from roudy college student-rentals and duplexes and has strict code enforcement to maintain a respected exterior aesthetic. An active police force also patrols the neighborhood to maintain its distance from the problems that college students may bring. The safety of this neighborhood compared to other wards is shown below in Figure 3.
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| Figure 3: Crime reports from Jan-March 2017 in Eau Claire, WI |
Finally, this neighborhood falls into the Lakeshore Elementary School District, which holds above-average academic scores compared to the rest of the state.
Eau Claire
When looking at Eau Claire itself, real estate is rapidly taken off the market with the city expanding and absorbing into the nearby Altoona. Eau Claire's growth has also given way to an increased availability in entertainment and recreation as well. The 3rd Ward is situated between Water Street (Eau Claire's infamous bar scene where many college students frequent) and the downtown bars (featuring a more laid-back experience and live music). In all, there are 29 bars located 1 mile away from 303 Garfield and an additional 26 in 2 miles--10 of which offer live music.
Phoenix Park (located less than a mile away) is a beautiful park along the confluence of the Eau Claire and Chippewa Rivers that hosts music in the park, the farmers' market, and is a great starting point for a tube ride down the river. Owen Park (also less than a mile away) hosts free music and movies during the summer. Demmler, Kappus, and Wilson parks are located within the 3rd Ward and hold a community garden, basketball courts, socccer fields, and playgrounds.
Additionally, there are 7 county parks in total and over 30 miles of biking trails offering ample opportunity to enjoy the scenic outdoors Eau Claire provides. The Eau Claire and Chippewa Rivers provide excellent fishing as well as Lake Altoona, Lake Hallie, and further out Lake Wissota.
CONCLUSION
Our final listing price for 303 Garfield was $208,735.66 well below its $220,000 price tag listed on Zillow and the $267,000 3rd ward-average asking price. With it's proximity to the University of Wisconsin-Eau Claire, the safety of the 3rd ward, and the location in the heart of Eau Claire itself, the target consumer would be a middle to upper-class family associated with the university and/or interested in the community.
We stuck with the regression analysis output of $208,735.66 because Eau Claire is an expanding city with houses rapidly being sold. The below-Zillow price and average 3rd Ward-price would hopefully drive up interest and start a bidding war for the property. Our asking price would be considered a fair asking price for the house features itself, but is undervalued due to its location and the consumer-flooded market. The strategy here would be to flood the number of initial bids and encourage a consumer to overpay in the midst of a bidding war.
