In 2011 home prices and mortgage rates dropped so low
In 2011, home prices and mortgage rates dropped so low that in a number of cities the monthly cost of owning a home was less than renting. The following data show the average asking rent for 10 markets and the monthly mortgage on the median-priced home (including taxes and insurance) for 10 cities where the average monthly mortgage payment was less than the average asking rent (The Wall Street Journal, November 26–27, 2011).


a. Develop the estimated regression equation that can be used to predict the monthly mortgage given the average asking rent.
b. Construct a residual plot against the independent variable
c. Do the assumptions about the error term and model form seem reasonable in light of the residualplot?
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