Consider a real estate company that has a dataset containing the prices of properties in the Delhi region. It wishes to use the data to optimise the sale prices of the properties based on important factors such as area, bedrooms, parking, etc.
Essentially, the company wants —
- To identify the variables affecting house prices, e.g. area, number of rooms, bathrooms, etc.
- To create a linear model that quantitatively relates house prices with variables such as number of rooms, area, number of bathrooms, etc.
- To know the accuracy of the model, i.e. how well these variables can predict house prices.
In this case study, you will learn the following important concepts:
- Model building using p-Value and VIF
- Why scaling of variables is important
- Evaluation of model using r-squared and adjusted r-squared