Regression Paper Housing Market

Regression Paper

January 31, 2011

Introduction

With the economy at a downward spiral, many houses are available at a low reasonable price, which makes the housing market the perfect time for a buyer to obtain the perfect house at a reasonable price. When purchasing a house the buyer must think about the aspects that can later boost the selling price for when they decide to make profit off of the house. Team A has chosen to prove that the alternate hypothesis that there is statistically significant correlation between house price and distance from center of town to be true. In this section we will be performing a regression test on this hypothesis, which we will attempt to accept or reject the null and hypothesis that there is no significant difference between the pricing.

Hypothesis

Our subject in this test is to show the correlation of house prices from the city to 15 miles out of the city. Team A is trying to prove if houses are more in price when they are closer to the city verses 15miles outside of the city? To prove this hypothesis right we have to find out the null and alternative hypothesis to determine if there is a difference in the price or not. We need to break up into groups. So we have Group A and Group B. Group A will be homes within 15 miles from the center of the city and Group B will be homes equal to 15 miles or further away from the city. Within this testing we will use data collected by the samples, we have acquired. These samples are taken from 105 observations.

Regression Hypothesis Test

For the Regression testing Team A will use the significance level for the analysis of alpha = 0.05. The testing method will be a t-test to compare two population means.

The Decision Rule is based on a 95% confidence interval. We will use a population sample of 105. If the t-value is > 1.96 the null hypothesis will be rejected as if the t-value is < 1.96 the null hypothesis will not be rejected.

For this sample, “Group A” are homes...