2. Time Series Techniques and an Example from Roger Simon’s The City Building Process

3. What is a Time Series? Numerical data ordered by intervals of time in chronological order The analysis of a time series involves decomposing the series into its components, e.g., –Trends –Cyclical and Seasonal Fluctuations –Irregular Fluctuations

4. Example of a Time Series 18882 188929 189033 189140 189256 189343 189439 189521 189638 Etc…31

5. To Analyze a Time Series… Identify the possible processes affecting the series: –Inflation or Deflation (for series of prices or expenditures) –Long term trend –Cyclical fluctuations –Seasonal fluctuations –Irregular fluctuations

6. Steps to Analyze Changing Construction Costs Identify a measure: –Construction Cost? Or…. –Construction Cost Per Square Foot Convert to Constant Dollars Measure the Trend Identify cyclical or seasonal factors Identify irregular fluctuations

7. Raw Construction Cost over Time

8. Properties Built over Time

9. Size of Buildings Built over Time

10. Adjusting for Inflation if yrbuilt >887 and yrbuilt < 912 then let concost2=concost*20 if yrbuilt >911 and yrbuilt < 916 then let concost2=concost/.06 if yrbuilt = 916 then let concost2=concost/.065 if yrbuilt = 917 then let concost2=concost/.077 if yrbuilt = 918 then let concost2=concost/.090 if yrbuilt = 919 then let concost2=concost/.104 if yrbuilt = 920 then let concost2=concost/.120 if yrbuilt = 921 then let concost2=concost/.107 if yrbuilt = 922 then let concost2=concost/.103 if yrbuilt = 923 then let concost2=concost/.102 if yrbuilt = 924 then let concost2=concost/.102 if yrbuilt = 925 then let concost2=concost/.105 if yrbuilt = 926 then let concost2=concost/.106 if yrbuilt = 927 then let concost2=concost/.104 if yrbuilt = 928 then let concost2=concost/.102 if yrbuilt = 929 then let concost2=concost/.102 if yrbuilt=. then let concost2= concost *20 if concost=. Then let concost2 =.

11. Construction Cost Adjusted for Inflation

12. Comparing Raw and Inflation Adjusted Construction Costs

13. Construction Cost per Square Foot (Inflation Adjusted)

15. The Model: Cost per square foot = constant(a) + b1*year + b2*(last year’s cost per square foot)

16. The Model: Cost per square foot = constant(a) + b1*year + b2*last year’s cost per square foot Cost per square foot = $7.33 +.59 (last year’s cost) +.29 (year) Number of cases: 39 (1889-1928). 1889=1 Adjusted R Square: 77.2

17. Trend and Residuals

18. The Data: 1.Year 2. Cost Per Square Foot 3. Last Year’s Cost Per Square Foot 4. Predicted Cost 5. Residual