FACTORS DRIVING RESIDENTIAL PRICES IN BOSTON IN THE 1980’S.

Abstract: This thesis report analyzes how different variables affected housing pricing in Boston in the 1980s. The goal was to form a deeper understanding of what could affect pricing for properties, both now and then. The method for analyzing this is a multiple linear regression analysis. The theory behind the work is based on linear regression and macroeconomics. The model is based on data collected by Harrison, D. and Rubinfeld, D.L. and obtained from The Carnegie Mellon University, Pittsburgh, Pennsylvania. The data consists of 506 observations with 20 variables each. The median value of the properties in a specific area measured in thousands of dollars is used as the response variable.The results of the report show that the number of rooms per dwelling has the largest effect on dwelling price, accounting for almost 40% of the influence in the final model, among the variables that were used. In second place comes the number of teachers per student and in third place is the tax rate in the area.The model result taken from showed good ability to approximately predict housing prices, with an adjusted R2 value of 0.8065.