please explain and give example: I would like you to think about what factors ha
ID: 3375467 • Letter: P
Question
please explain and give example:
I would like you to think about what factors have an impact on the selling price of houses in an area. In more technical terms, the selling price of houses is our dependent variable. For your contribution, you must make suggestions for independent variables that we should include in a linear regression. You must also indicate if you think that your variable will increase or decrease the price along with an explanation why you think that your X variable will have an impact on the Y variable (price of houses).
Explanation / Answer
Independent variables that should be included in a linear regression to predict selling price of houses in an area are:
X = Area of the house in sq ft/ sq metres
As area increases cost of the house will increase
X = age of the house.
As age increases cost decreases, since new homes are costlier and old ones require more maintenace.
X= distance from the nearest bus station/train station or airport.
As X increases cost decreases since people prefer homes closer to such locations
X1 = no. of schools in that area
As X1 increases the cost will increase since it will be a location preferred by people living in families with children.
X2 = distance from nearest school
As X2, increases the cost will decrease since it will be inconvenient for families with children.
X= Parking lots available or not(Binary)
When not available the cost will decrease.
X = distance from the nearest sgopping locations
As distance increases cost will decreases, because frequent visits will become difficult
X = distance from the nearest sgopping locations
As distance increases cost will decreases, because frequent visits will become difficult
X = Average price of houses sold in that area
As past price increases cost will increase, because clients usually expect to pay prices closer to prior purchases in that region. Also there is usually an overall increase in prices due to inflation.
X = distance from the nearest such locations
As distance increases cost will decrease.
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