Determinants of Housing Price

What matters when determining the price of a house? Is the value of the components of a home quantifiable? What changes can you make to your house to increase value the most?

— Aidan Padala

Photo by todd kent on Unsplash

Square Footage

Bedrooms

Avg. House Price ≈ 100,000 + 100,000 * Bedrooms

This gives us a rough indication that building a new bedroom onto a house can increase its value by about $100,000. According to homeguide.com,

Bathrooms: A Cautionary Tale

log(P/100,000) = 0.75 + 0.5(B) → P = 100,000*e^(0.75 + 0.5B)

where P = House Price and B = # of Bathrooms. This relationship is very closely mirrored on the graph on the left, where a plot of average house value and Number of Bathrooms almost identically mirrors the relationship derived from the graph on the right. Whereas adding a bedroom to a house is mostly linear, we see that the value added by adding a bathroom depends on how many bathrooms you already have.

Crime Rates

In looking for a home, future homeowners want a place where they will feel safe, so logically housing prices and crime rates should be correlated.

Code

See the original code in our R Notebook

Data Sources

  1. Seattle Crime Statistics
  2. House Sales in King County, USA
  3. Housing Price Index Using Crime Rate Data

Studying Computer/Data Science at the University of Pennsylvania

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