Introduction:
This paper aims at collecting data from a source on the inclining or declining housing prices from 2005 to present. Once the data has been collected, the linear relationship between the data will be determined. The curve-fitting technique that will be used to find linear the module for the data is Microsoft Excel. Excel will also be used to determine the equation of a line of best fit for the data. The linear equation of the data will be the regression line and it will be analyzed to show the linear relationship between the data collected.
The table below shows the housing prices in the United States from 2005 to 2011. The data has been collected from Retrieved from http://www.jparsons.net/housingbubble/ and it indicates the nominal housing prices during this period.
Year
House Prices in dollars
Table 1: Table showing the housing prices in The United States from 2002 to 2011 Retrieved from http://www.jparsons.net/housingbubble/
Chart 1: Scatter plot for housing prices from 2005 to 2011 with a linear line of best fit.
The chart above is a scatter plot for the housing prices from 2005 to 2011. The table of housing prices was pasted into excel and the scatter plot generated. The x-axis indicates the housing prices while the y-axis indicates the year. The data was fed into an excel sheet and the linear relationship of the data was determined. A linear line has been drawn on the chart in order to show the relationship between house prices throughout the years. A number of data points on the curve have been selected in order to draw the linear line. The curve fitting technique that is used by excel is smoothing. The linear line describes a smooth function that fits the housing prices data over the years.
The equation of the line is y = -12143x + 270,000 and the value of R² is 0.510. Comparing this to the standard equation of a line given by y = mx + c where m is the slope of the graph and c is the y intercept. The slope of the graph is -12143. This indicates that the trend of housing prices has been decreasing over the years. This may be explained by the decline of the economy during the recession. The negative slope of the graph indicates that the housing prices are declining through this period. In addition, the value of R² is 0.510. This indicates that there is a medium degree of relationship between the housing prices and the years.
Works Cited:
"Real Estate Charts: Graphs of inflation-adjusted, historical housing prices.." Real Estate Charts: Graphs of inflation-adjusted, historical housing prices.. N.p., n.d. Web. 15 Sept. 2012.
Gross, Jürgen. Linear Regression. Berlin: Springer, 2003. Print.
