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14 views5 pages

AB504

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6Writers Experts
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Housing Price Prediction Model for D.M.

Pan Real Estate Company

[Your Name]

Southern New Hampshire University


Median Housing Price Prediction Model for D.M. Pan National Real Estate Company 2

Module Two Notes

Figure 1 below shows the scatterplot graph for the Northeast region that was selected as

the sample to complete module 2. The chart provides data for a randomized sample of 30 homes

in attempt to demonstrate the relationship between square feet and listing price.

Figure 1: Northeast region scatterplot

Regression Equation

The regression equation is useful in statistics in terms of estimating the relationship

between several variables. In this case, the equation would help estimate the relation between the

square feet and listing price for homes in the Northeast region. Thus, the regression equation is

as follows: y = 126.74x + 82687.

Determine r

In addition to helping measure the strength of the relation between two variables,

correlation r also establishes the direction, i.e., strength. The correlation between the listing price

and the square feet can be determined using the Corel function in excel.
Median Housing Price Prediction Model for D.M. Pan National Real Estate Company 3

Figure 2

Figure 2 shows the approximate correlation as 0.97. Firstly, there is a positive association

between the variables, meaning that as the square feet for homes in the region increases the

listing price also increases. Secondly, the direction of the correlation is strong as it is much closer

to 1.

Examine the Slope and Intercepts

The regression equation was identified in the scatterplot as: y=126.74x + 82687.

Accordingly, the slope is 126.74x whereas the intercept is (+)82,687. One conclusion based on

the slope is that when the square feet is increased by 1 unit, listing pricing should increase also

increase by multiplying it with $126.74. For example. In a 1,000 square feet would be as follows:

$126.74*1000= $126,740. Another conclusion based on the intercept is that if the square feet is

zero (0) then the listing price for a home in the region should be $82,687. Therefore, the slope

and intercept in the equation help determine the listing price depending on the specified square

footage where the minimum starts at $82,687.

R-squared Coefficient

The coefficient of determination is determined by squaring the correlation i.e.,

multiplying it by itself or by using the (=RSQ) formula in Excel. It helps determine the amount

of variation in y that is explained by x. In this analysis, it informs us the amount of variation in

the listing price, i.e., how much the listing price is varying, that is explained by how much the

square feet area is varying in the selected sample.

Figure 3
Median Housing Price Prediction Model for D.M. Pan National Real Estate Company 4

Figure 3 shows the approximate coefficient of determination for the selected sample is

0.95. Ideally, the coefficient value should be as close to 1 as possible to represent a really good

data model. Since the coefficient value or the selected sample is approximately 0.95, which is

close to 1, it implies that the data model is reliable. Thus, we can say that almost 95% of the

variation in the listing price is explained by variation in the square feet area for homes in the

Northeast region.

Conclusions

Figure X demonstrates the comparison of square footage statistics for national data

against that of the Northeast region. As shown, the mean and median square footage for homes in

the Northeast region are lower than the national mean; however, since they are separated by a

few units, it shows that the square footage for the region is almost similar to the other regions in

the country.

Figure 4

As shown in Figure 4, the standard deviation for the Northeast region is higher than for

homes overall in the US, meaning there is more variation in the square footage of the homes in

the region compared to the nation standard deviation. The Min for the Northeast region is 1,104,

which is almost the same as the national standard, i.e., 1,101. The first and third quartiles for the

selected sample are lower than the national quartiles; however, the differences are not so
Median Housing Price Prediction Model for D.M. Pan National Real Estate Company 5

significant. In summary, the statistics shows the square footage for Northeast region is almost the

same as that for homes overall in the US. However, some of the differences may come from

varying factors for each region in the country.

The slope intercept in the regression equation makes it possible to determine how much

the price goes up depending on the square footage. The slope intercept implies that for each unit

change in square footage, the listing price goes up by $126.74. Thus, for every 100 square feet,

we determine the listing price as follows: $126.74 * 100 = $12,674.

The scatterplot shown in Figure 1 shows that the range of the data is between 1,000 and

4,000 feet. For example, we can attempt to determine the listing price for 800 square feet using

the regression equation: 126.74*800 + 82687 = $184,079. However, the property falls out the

data range, which means that the approximation may not be accurate. Therefore, the square

footage range that the scatterplot graph would be best suited for would be between 1,000 and

4,000.

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