BUS 511 Presentation

Topic: Estimating the Housing Price in Oregon

(Original Case Study by Marlene A. Smith & Peter G. Bryant)
PRESENTED BY
Asiq Mahmud (ID# 122 1065 060)
Nazia Zahid (ID# 123 0635 060)
Nabila-E-Lutfy (ID# 131 0688 060)
Ayesha Akhter (ID# 131 0434 060)
Farah Sultana Yaam (ID# 131 0564 060)
Md. Farhis Hossain (ID# 121 1085 060)




PRESENTED TO
Dr. Abdul Hannan Chowdhury
Professor and Dean
School of Business
North South University

Case Overview
The original case study by Marlene A. Smith & Peter G. Bryant
titled Housing Price (Case #28 - Practical Data
Analysis: Case Studies in Business Statistics) asks to estimate
the housing price in Oregon based on the real survey
conducted over 108 sample
Sample Overview
Sample Size: 108 houses in Oregon, East ville

Dependent Variable:
Housing Price

Independent Variable:
Area
No of Bed rooms
No of Bath rooms
Heating Method
The architectural style of the home
Maximum number of cars that can fit in the garage
Availability of basement facility
Age of the house in years
Availability of Fire place facility
Nearby School

Objective of the Study
To find the relationship between Selling Price of House and
Area of the house

To find the relationship between Selling Price of House and No
of Bed rooms

To find the relationship between Selling Price of House and No
of Bath rooms

To find the relationship between Selling Price of House and
Heating Method of the house

To find the relationship between Selling Price of House and
The architectural style of the house

To find the relationship between Selling Price of House and
Maximum number of cars that can fit in the garage

Objective of the Study
Contd.
To find the relationship between Selling Price of House and
Availability of basement facility

To find the relationship between Selling Price of House and
Age of the house in years

To find the relationship between Selling Price of House and
Availability of Fire place facility

To find the relationship between Selling Price of House and
Nearby School

Regression analysis of the independent variables with the
dependent variable and forming a model

Testing usefulness of the model

Methodology
No primary source have been used in the
study while All the data have been collected
from Secondary Source only

Housing Price (Case #28 - Practical
Data Analysis: Case Studies in Business
Statistics)

Description Of the Variables
Price: Selling Price of the Houses of the Selected Sample
Area: Total area of the house (in Sq Ft)
Bedrooms: Total Number of Bedrooms
Bathrooms: Total Number of Bathrooms
Heat: Type of Heating Method(0= Gas Forced 1=Electric)
Style: The architectural style of the home (0 = a tri-level, 1 = a
two-story house, and 2 = a ranch- styled home)
Garage: The maximum number of cars that can fit in the
garage.
Basement: Availability of basement facility (0= Yes 1=No)
Age: Age of the house in years
Fire: Availability of Fire place facility (0= Yes 1=No)
School: Nearby School (0 = Eastville School District and 1 =
Apple Valley School District
Description Of the Model
Theoretical Model:
Selling Price= f (X
1
, X
2
, X
3
, X
4
, X
5
, X
6
, X
7
, X
8
, X
9
, X
10
)


Regression Model:
=
0
+
1
X
1
+
2
X
2
+
3
X
3
+
4
X
4
+
5
X
5
+
6
X
6
+
7
X
7
+
8
X
8
+

9
X
9
+
10
X
10

Where,
x
1
= Area x
2
= No of Bed rooms x
3
= No of Bath rooms x
4
= Heating Method
x
5
= The architectural style of the home x
6
= Maximum number of cars that
can fit in the garage x
7
= Availability of basement facility x
8
= Age of the
house in years x
9
= Availability of Fire place facility x
10
= Nearby School

Correlation Test
Area BEDS BATHS HEAT STYLE GARAGE BASEMENT AGE FIRE SCHOOL PRICE
Area 1
BEDS 0.24 1
BATHS 0.61 0.39 1
HEAT 0.07 -0.03 -0.05 1
STYLE 0.31 0.09 0.50 -0.12 1
GARAGE 0.43 0.07 0.27 -0.02 0.19 1
BASEMENT 0.09 0.20 0.19 -0.05 0.34 0.20 1
AGE -0.29 0.28 -0.12 0.05 -0.16 -0.12 0.06 1
FIRE 0.32 0.01 0.31 0.07 0.25 0.13 -0.07 -0.28 1
SCHOOL 0.16 0.02 0.24 -0.14 0.39 0.15 0.22 -0.19 0.13 1
PRICE 0.83 0.25 0.56 -0.09 0.43 0.55 0.27 -0.39 0.34 0.32 1
Correlation Test (Hypothesis
Testing)
Dependent Independent Correlation P-Value Decision
Selling Price
AREA 0.83 0.000 Null Rejected
BEDS 0.25 0.004 Null Rejected
BATHS 0.56 0.000 Null Rejected
HEAT -0.09 0.000 Null Rejected
STYLE 0.43 0.188 Null Not Rejected
GARAGE 0.55 0.000 Null Rejected
BASEMENT 0.27 0.000 Null Rejected
AGE -0.39 0.005 Null Rejected
FIRE 0.34 0.000 Null Rejected
SCHOOL 0.32 0.001 Null Rejected
Partial Regression Test
Test of each variables to see their impact on
the dependent variable

H
0
= The independent variable doesnt have
any impact on the dependent variable (b1 = 0 )
H
a
= The independent variable has an impact on
the dependent variable (b1 0 )

Partial Regression Test
(Hypothesis Testing)
Dependent Independent b P-Value Decision
Selling Price
AREA 0.049 0.000 Null Rejected
BEDS 9.826 0.008 Null Rejected
BATHS 26.85 0.000 Null Rejected
HEAT -11.96 0.377 Null Not Rejected
STYLE 12.85 0.000 Null Rejected
GARAGE 43.56 0.000 Null Rejected
BASEMENT 19.31 0.005 Null Rejected
AGE -2.22 0.000 Null Rejected
FIRE 28.55 0.000 Null Rejected
SCHOOL 17.14 0.001 Null Rejected
Multiple Regression Test
Basic Equation

=
0
+
1
X
1
+
2
X
2
+
3
X
3
+
4
X
4
+
5
X
5
+
6
X
6
+
7
X
7
+
8
X
8
+

9
X
9
+
10
X
10

Where,
x
1
= Area x
2
= No of Bed rooms x
3
= No of Bath rooms x
4
= Heating
Method x
5
= The architectural style of the home x
6
= Maximum number of
cars that can fit in the garage x
7
= Availability of basement facility x
8
= Age
of the house in years x
9
= Availability of Fire place facility x
10
= Nearby
School


Multiple Regression Test
Coefficients(a)
Unstandardized
Coefficients
Standardized
Coefficients
Model
B Std. Error Beta t Sig.
1
(Constant) -15.212 9.818 -1.549 0.125
AREA 0.038 0.004 0.633 10.365 0.000
BEDS 4.924 1.965 0.127 2.506 0.014
BATHS -2.912 3.024 -0.061 -0.963 0.338
HEAT -12.91 6.101 -0.093 -2.116 0.037
STYLE 2.288 1.644 0.076 1.392 0.167
GARAGE 15.759 3.825 0.198 4.121 0.000
BASEMENT 9.077 3.445 0.126 2.635 0.010
AGE -1.034 0.281 -0.182 -3.676 0.000
FIRE 5.305 3.979 0.063 1.333 0.186
SCHOOL 4.622 2.534 0.086 1.824 0.071
a. Dependent Variable: Selling Price
The variables BATHS, STYLE, FIRE and SCHOOL were not
proven to be significant to be included into the model
Multiple Regression Test
REVISED REGRESSION MODEL
Housing Price (Y) = -12.5988 + .0383* Area + 4.3573* No
of Bed Rooms 14.5371* Heating Method +16.0610* the
number of cars that can fit in the garage + 11.3576*
Availability of basement facility - 1.2168* Age of the house
in years
REVISED REGRESSION MODEL (WITHOUT INTERCEPT)
Revised Housing Price (Y) = 0.04 * AREA -15.623 * HEAT
+14.303 * GARAGE + 12.483 * BASEMENT 1.030 * AGE
Model Adequacy Test
Correlation Coefficient, R = 99.3%
Coefficient of Determination, R
2
= 98.6%
Hypothesis Testing:
H
0
: The model is Adequate (
1
=
2
=
3
=
4.
=
4
=0)
H1: The model is not adequate (at least one 0)


Test Result:
P-Value (Sig.): 0.000
Decision Rule: Null is Rejected
Interpretation: The regression model is adequate
Summary of Findings
The area of the house has a positive correlation with
Housing price and the relationship is significant.

The number of bedrooms and bath rooms, both have
positive correlation with the housing price; however, the
relations are not statistically significant in predicting the
housing price.

The heating method of the house has negative correlation
with housing price. It means that the houses with gas forced
heating method tend to be priced less than those of with
electric heater.

The capacity of garage has positive correlation with the
housing price and the relationship is significant.

Summary of Findings

Age of the house is negatively correlated with housing price
and the relation is statistically significant. This means, that the
less is the age of the house, greater is the price of that house.

Availability of Fireplace and School nearby has positive
correlation with housing price but these relations are not
statistically significant.

The architectural style of the house has a positive correlation
with the housing price. However, it fails to prove significance in
estimating the housing price.

The multiple linear regression model estimated is adequate in
predicting the housing price in Oregon.