The appraisal of a warehouse can appear straightforward compared to other appraisal assi...

The appraisal of a warehouse can appear straightforward compared to other appraisal assignments. A warehouse appraisal involves comparing a building that is primarily an open shell to other such buildings. However, there are still a number of warehouse attributes that are plausibly related to appraised value. The article “Challenges in Appraising ‘Simple’ Warehouse Properties” (Donald Sonneman, The Appraisal Journal, April 2001, 174–178) gives the accompanying data on truss height (ft), which determines how high stored goods can be stacked, and sale price ($) per square foot.

a. Is it the case that truss height and sale price are “deterministically” related—i.e., that sale price is determined completely and uniquely by truss height? [Hint: Look at the data.]

b. Construct a scatterplot of the data. What does it suggest?

c. Determine the equation of the least squares line.

d. Give a point prediction of price when truss height is 27 ft, and calculate the corresponding residual.

e. What percentage of observed variation in sale price can be attributed to the approximate linear relationship between truss height and price?