Research Project Research Project Overview: Students will work in groups of 2 (or occasionally 3) on research projects investigating economic relationships. The output of your project should be...

Slide 1
US Housing Market Value 1919 -2013
Introduction
House price swings are gaining attention in academics and the general public, owing to their apparent expanding influence on consumer spending and financial markets.
Dropping house values may have a huge influence on financial markets, as proven by the subprime mortgage market crisis that began in the United States in August 2007 and expanded to financial markets throughout the world.
Policymakers are primarily concerned with the impact of changes in house prices on the business cycle.
A significant increase in property prices could cause the economy to "overheat," whereas a drop in property prices could signal an overall economic slowdown.
Housing prices in the United States climbed dramatically before plummeting precipitously.
Because many jobs are linked to the value of property through household and public sector expenditure, particularly local government spending, recent swings in housing values and employment have had major macroeconomic and microeconomic effects.
Review of literature
Rapach & Strauss(2009) This study focuses on projecting real house prices across shorter time periods of four and eight quarters, in line with cu
ent concerns regarding short-term swings in real home prices.
It investigates the predictability of real house prices across US states from 1995 to January 2006, including a lengthy housing market slump.
The findings demonstrate a significant variance in house price predictability among states, which is connected to variations in median home price increase.
Cohen Coughlin & Lopez (2012) This paper attempts to describe the major developments in housing prices in recent years from both a national and an u
an viewpoint.
Furthermore, an analysis of the economies of 18 other sophisticated foreign nations demonstrates that housing price booms and busts are not exclusive to the United States.
Usage in 1998: Q1 at the start of the boom and 2006: Q2 is like a
eaking point bankruptcy boom, some housing price observations can be made.
In terms of the country, the S&P/Case-Shiller index more than doubled in nominal terms during the boom and then reduced by roughly a third
The index has gained little under 50% in total. However, the FHFA Purchase Index shows substantially smaller gains (83%) and relatively lower drops (18%) during booms.
Nonetheless, the index's total volatility is somewhat less than 50%, which is nearly the same as the S&P/Case-Shiller index.
Objective
The objective of the paper is to find the determinant of housing price utilizing the dataset from kaggle for the period 1919 to 2013.
Data source:
https:
www.kaggle.com/datasets
ahulyadav0710/capstone-dataset-hads
Co
elations
This co
elation table shows that there is a negative co
elation between structuretype and rooms, region and rooms, costmed and structure type, region. Overall there is a weak co
elation between independent variables
Regression Model
Y = β0+β1x1+ β2x2+ β3xd3+ β4xd4+ β5xd5
Y:house value
x1: Year Built
x2: Number of Rooms
xd3: Structure Type dummy 1 - House, apartment, flat
2  -Mobile home with no permanent room added
3  -Mobile home with permanent room added
4  -HU, in nontransient hotel, motel, etc
5 -HU, in permanent transient hotel, motel, etc
6  -HU, in rooming house
7  -Boat or recreation vehicle
9  -HU, not specified above
xd4: Region dummy
1-Northeast,2-Midwest,3-South and 4-west
x5: Medium Mortgage
Regression output
House value regression model
Y = 71286.01-49.74x1-2531.60 x2-5173.43 xd3+2810.29xd4+ 162.99xd5
One year increase in the year built on an average decreases the value of house by $49.74.
One room increase in the house on an average decreases the value of house by $2531.60.
If the type of house is House, apartment, flat, then the value of house will decreases by $5173.43.
If the house is located in Northeast region the value of house on an average increases $2810.29.
One unit increase in medium mortgage cost on an average increases the value of house by $162.99.
References
Rapach, D. E., & Strauss, J. K. (2009). Differences in housing price forecastability across US states. International Journal of Forecasting, 25(2), 351-372.
Cohen, J. P., Coughlin, C. C., & Lopez, D. A. (2012). The boom and bust of US housing prices from various geographic perspectives. Federal Reserve Bank of St. Louis Review, 94(Septembe
October 2012).
United States Housing Market & Prices | Redfin. (2023.). Retrieved March 28, 2023, from https:
www.redfin.com/us-housing-market
Caporal, J. (2023, March 9). Average house price by state in 2022. The Motley Fool. Retrieved March 28, 2023, from https:
www.fool.com/the-ascent
esearch/average-house-price-state/
ROOMSSTRUCTURETYPEREGIONCOSTMED
ROOMS 1
STRUCTURETYPE-0.271651
REGION-0.019570.0518661
COSTMED0.339258-0.08775-0.005831
Data 2013
    CONTROL    AGE1    METRO3    LMED    FMR    IPOV    BEDRMS    BUILT    STATUS    TYPE    VALUE    NUNITS    ROOMS    PER    ZINC2    ZADEQ    ZSMHC    STRUCTURETYPE    OWNRENT    UTILITY    OTHERCOST    COST06    COST12    COST08    REGION    COSTMED    ASSISTED    Age...