NAME: ALATISE OLORUNYOMI STEVE

MATRIC NO: 239053010

COURSE: FSS 840
PROGRAM: MASTER IN ESTATE MANAGEMENT (FULL TIME)

Question: Inferential statistics use a random sample of data taken from a population to describe
and make inferences about the population. As it relates to your field of Specialization. Elucidate.

Solution
It is no news that the growth of various research fields is primarily fostered by research studies

done in the fields. This implies that as these research fields grow with respect to the number of

studies done, the scope of these fields expands. Hence, the quality of research is determined in part

by the research methodologies used, and the use of these research methodologies in which

inferential statistics is a major category has become more important in making informed decisions.

Inferential statistics as one of the multiple categories of statistical methods is concerned with

drawing inferences from or making conclusions about populations from a smaller sample drawn

from the said population. The major concern in inferential statistics is testing of hypotheses on

samples and hoping that these hypotheses if true of the sample, will be true and generalized to the

population under study. Invariably, inferential statistics helps to develop a great comprehension of

the entire population data by analyzing the various samples drawn from the population; it helps in

making generalizations about the population by applying different analytical tests and tools to the

samples obtained from the population. Hence, inferential statistics can be defined as a field of

statistics that uses analytical tools to make inferences or conclusions about a population. In

inferential statistics, a statistic is taken from the sample data, for instance, the sample mean to

make inferences about the population parameter, for instance, the population mean.
Types of Inferential Statistics

Inferential statistics can be categorized into hypothesis testing and regression analysis.

The former includes the use of confidence intervals to test the parameters of a population. This

class of inferential statistics is used to test assumptions and make inferences about the population

from the available sample data. The process of hypothesis testing involves setting up a null and an

alternative hypothesis by conducting a statistical test of significance. Upon the statistical test, a

conclusion is drawn based on the value of the test statistic, the critical value, and the confidence

intervals. A test of hypothesis can skew to either left or right and can be two-tailed. The following

are include some of the hypothesis tests used in inferential statistics; Z test, T test, F test,

confidence interval, etc.

While the later, regression analysis is used to quantify how one variable will change with respect

to another variable. There are many types of regressions available such as simple linear, multiple

linear, nominal, logistic, and ordinal regression. The most commonly used regression in inferential

statistics is linear regression. Linear regression checks the effect of a unit change of the

independent variable in the dependent variable. Some important formulas used in inferential

statistics for regression analysis are as follows:

The equation is given as y = α + βx where α and β are regression coefficients.

Application of Inferential Statistics to the Field of Estate Management; Linear Regression

Linear regression as an inferential statistical tool is widely used in real estate, to analyze and model

relationships between variables. In the context of real estate, linear regression can be applied in

several ways:

Price Prediction:
Linear regression can be employed to predict property prices based on various factors such as

square footage, number of bedrooms, location, and other relevant features. By analyzing historical

sales data, a regression model can be trained to estimate the potential value of a property.

Property Valuation:

Real estate professionals often use linear regression to assess the value of a property by considering

factors like the age of the property, amenities, proximity to schools or public transportation, and

other features. This helps in determining an accurate market value for buying, selling, or

refinancing.

❖ Rental Price Estimation: It is useful in estimating rental prices. Factors such as property

size, location, nearby facilities, and other amenities can be used to build a regression model

to predict rental rates in a given area.

❖ Risk Assessment: It assists in evaluating the risk associated with real estate investments.

By analyzing historical data and identifying variables that correlate with market

fluctuations, investors can use regression models to assess the potential risks and returns

of a particular property or market.

❖ Hedonic Pricing Analysis: This approach involves breaking down the property into its

constituent features and analyzing how each feature contributes to its overall value. Linear

regression helps in quantifying the impact of each factor, allowing for a more accurate

assessment of property prices. An example of this is the valuation of green buildings

❖ Market Trends and Analysis: This model can be applied to analyze market trends over

time. By examining how certain factors influence property prices or rental rates, real estate
 professionals can gain insights into the dynamics of the market and make informed

decisions.

❖ Investment Decision Making: Investors can use linear regression to assess the potential

return on investment for different properties. By analyzing the relationship between

property features and historical performance, investors can make data-driven decisions

about where to allocate their resources.

❖ Feasibility Studies: Linear regression can be employed in feasibility studies for real estate

developments. By considering variables like construction costs, location attributes, and

market demand, developers can use regression analysis to predict the viability and potential

success of a new project.

In conclusion, inferential statistics is a versatile statistical method in the real estate industry as it

aids in price prediction, property valuation, risk assessment, market trend analysis, and decision-

making processes for investors, developers, and other stakeholders.