Model for Forecasting Price of Houses in City of Stillwater, OK

Abstract

The purpose of this study was to construct a model for forecasting selling price of houses in city of Stillwater, Oklahoma which estimates the selling price with reasonable degree of accuracy and which is easy to understand and apply. The data for this study was collected from local real estate agents and Municipal Corporation in Stillwater. The data was collected from 1988 to 2004. The analysis was done using method of Multiple Regression. The validation of the model was done using data collected from January 2005 to February 2006. The predicted values obtained from the forecasting model, on an average were 6% different from the actual values of the selling prices for the validation data set. Since the data related to factors like age and condition of the house and economic factors like the interest rate were not included, the 6% average difference between the actual values and the predicted values is reasonable. The data used in this study is from a small period of time and hence results obtained from this study should be used with care.