Group 3Members: Dan Sun

Hongliang WuHui LaiHui WangLing-Ching HsuSeok-Rahn LeeShin-Hao LeeYuanbo Mao

Analysis ofHouse Price in

California

Econ 240 A

Agenda

Historical House Prices in California

The Purpose of Our Project

Statistical Analysis

Conclusion

Historical House Prices in California 1976 - 2008

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1980 1985 1990 1995 2000 2005

MEDIANHOMEPRICE

The Purpose of This Project

To Test the Possible Factors that May Influence the House Prices

• Personal Income per Capita• Mortgage Rate• Unemployment Rate• Population Growth

To Investigate How Each of These Factors Affects the House Prices

To Build Models to Forecast Future House Prices in California

House Price vs. Income per Capita

Statistical Analysis

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15000 20000 25000 30000 35000 40000

INCOMEPERCAPITA

ME

DIA

NH

OM

EP

RIC

E

House Price vs. Unemployment Rate

Statistical Analysis

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4 5 6 7 8 9 10 11

UNEMPLOYMENT

ME

DIA

NH

OM

EP

RIC

E

Statistical AnalysisHouse Price vs. Mortgage Rate

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4 6 8 10 12 14 16 18

MORTGAGE

ME

DIA

NH

OM

EP

RIC

E

Statistical AnalysisHouse Price vs. Population Growth

Rate

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0 1 2 3 4 5 6 7

CHANGEOFPOPULATION

ME

DIA

NH

OM

EP

RIC

E

Statistical AnalysisHouse Price vs. Income per Capita,

Unemployment Rate and Mortgage Rate

Statistical AnalysisRegression Diagnostics - Normality

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-100000 -50000 0 50000 100000

Series: ResidualsSample 1976 2008Observations 33

Mean 6.17e-12Median 8791.570Maximum 96547.63Minimum -84804.66Std. Dev. 45012.33Skewness 0.023099Kurtosis 2.605266

Jarque-Bera 0.217180Probability 0.897098

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PREDICTED

RESID

Statistical AnalysisRegression Diagnostics –

Homoscedasticity

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1980 1985 1990 1995 2000 2005

Residual Actual Fitted

Statistical AnalysisRegression Diagnostics -

Independence

Statistical Analysis

4

5

6

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9

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11

UNEMPLOYMENT

16000

20000

24000

28000

32000

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INCOMEPERCAPITA

Regression Diagnostics - Outliers

Statistical AnalysisHouse Price vs. Income per Capita,

Unemployment Rate and Mortgage Rate w/ Dummy Variables

Statistical AnalysisRegression Diagnostics - Normality

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-100000 -50000 0 50000 100000

Series: ResidualsSample 1976 2008Observations 33

Mean -5.12e-11Median 6280.711Maximum 93582.02Minimum -80773.18Std. Dev. 42062.68Skewness -0.024300Kurtosis 2.596128

Jarque-Bera 0.227528Probability 0.892469

Statistical AnalysisRegression Diagnostics -

Homoscedasticity

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-50000

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PREDICTED

RESID

Statistical AnalysisRegression Diagnostics -

Independence

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-50000

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50000

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1980 1985 1990 1995 2000 2005

MEDIANHOMEPRICE Residuals

Conclusion Income per Capita, Unemployment Rate and Mortgage

Rate Are Significant, whereas Population Grow Rate is not

T here Is a Linear Correlated Relationship between House Price and Income per Capita, Unemployment rate and Mortgage Rate

Build Model to Forecast Future House Prices in California

Questions?