GOVERNMENT POLYTECHNIC GANDHINAGAR

NAME :- Valand Diya G

ENROLLMENT NUMBER :- 226230316221

NAME :- Shrimali Khyati S

ENROLLMENT NUMBER :- 226230316200

NAME :- Mandal Piyush Prabhakar V.

ENROLLMENT NUMBER :- 236238316003

TOPIC :- "PREDICTING HOUSE PRICES"

THE PROJECT DESCRIPTION :-

● The project Topic :- "Predicting House Prices" involves building a machine learning
model that can accurately estimate the prices of houses based on various features such
as the number of bedrooms, square footage, location, and other relevant factors. The
significance of this project lies in its practical application in the real estate industry and
related fields. By accurately predicting house prices, stakeholders such as homebuyers,
sellers, and real estate agents can make informed decisions, negotiate better deals, and
optimize their investment strategies.
● Here are some key points highlighting the significance of predicting house prices :-

(1) Real Estate Market Analysis :- Accurate price predictions enable a better understanding
of the real estate market trends, including identifying areas with high growth potential or
areas that are overpriced. This information can be valuable for real estate investors,
developers, and policy-makers in making informed decisions.
(2) Homebuyers and Sellers :- For homebuyers, predicting house prices helps in
determining a fair purchase price, negotiating effectively, and avoiding overpaying.
Similarly, sellers can use price predictions to set a competitive listing price and optimize
their returns.

(3) Financial Planning and Investment :- Predicting house prices aids in financial planning
by allowing individuals to estimate the value of their real estate assets accurately.
Additionally, investors can use these predictions to identify properties with high potential
for appreciation or as a basis for rental income projections.

(4) Mortgage Lending and Risk Assessment :- Accurate house price predictions play a
crucial role in mortgage lending, allowing lenders to assess the value of collateral
accurately and make informed lending decisions. It helps in managing risks associated
with mortgage portfolios and ensuring sound underwriting practices.

(5) Economic Studies and Policy-Making :- House price predictions contribute to economic
studies by providing insights into the state of the housing market and its impact on the
overall economy. Policymakers can use these predictions to formulate housing policies,
assess market stability, and address issues related to affordability and housing supply.

DATASET DESCRIPTION :-

● To provide a dataset description for predicting house prices , let's assume we are using
the "House Sales in King County, USA" dataset sourced from Kaggle. Here are the
details :-

● Source: The "House Sales in King County, USA" dataset is sourced from Kaggle, a
popular platform for data science and machine learning competitions. The dataset can
be accessed at: [insert dataset link]

● Size: The dataset contains records of real estate transactions in King County, USA. It
typically consists of several thousand instances (rows) and multiple features (columns).

● Features: The dataset includes various features that can be used to predict house
prices. Some common features found in such datasets are :-

(1) Id: Unique identifier for each house.

(2) Date: Date of the house sale
(3) Bedrooms: Number of bedrooms in the house.
(4) Bathrooms: Number of bathrooms (both full and half) in the house.
 (5) Sqft_living: Total living area in square feet.
(6) Sqft_lot: Total lot area in square feet.
(7) Floors: Number of floors in the house.
(8) Waterfront: A binary variable indicating whether the house has a view of the waterfront
or not.

(0) Condition: Overall condition of the house on a scale of 1 to 5.

(1) Grade: Overall grade given to the house based on the King County grading system.
(2) Sqft_above: Square footage of the house apart from the basement.
(3) Sqft_basement: Square footage of the basement.
(4) Year_built: Year the house was built.
(5) Year_renovated: Year of the house's last renovation.
(6) Zip Code: Zip code of the house location.
(7) Lat: Latitude coordinate of the house.
(8) Long: Longitude coordinate of the house.
(9) Sqft_living15: Living area of the nearest 15 neighbors.
(10)Sqft_lot15: Lot area of the nearest 15 neighbors.

DATA PREPROCESSING

● In the data preprocessing stage of the "Predicting House Prices" project, several steps
are commonly performed to ensure the data is suitable for training a machine learning
model. Here are the typical preprocessing steps:

(1) Handling Missing Values :-

– Identify any missing values in the dataset, typically represented as NaN or null values.
– Analyze the extent and pattern of missing data.
– Decide on an appropriate strategy to handle missing values. Options include removing rows or
columns with missing values, imputing missing values with mean, median, or mode, or using
advanced imputation techniques such as regression imputation or k-nearest neighbors
imputation.

(2) Removing Outliers:

– Identify any outliers in the dataset that may significantly affect the model's performance or bias
the predictions.
– Use statistical techniques such as Z-score, Tukey's fences, or the interquartile range (IQR)
method to detect outliers.
– Decide on a suitable approach for handling outliers, such as removing them from the dataset
or transforming them using winsorization or logarithmic transformations

(3) Encoding Categorical Variables :-

– Identify categorical variables in the dataset, such as location or property type.

– Choose an appropriate encoding technique based on the nature and cardinality of the
categorical variables.
– One-hot encoding: Convert each category into a binary column, where 1 represents the
presence of the category and 0 represents its absence.
– Label encoding: Assign a unique numerical label to each category.

DATA EXPLORATION AND EXPLORATION :-

● Data exploration and visualization are crucial steps in understanding the "House Sales in
King County, USA" dataset and gaining insights into the relationships between the
features and the target variable (house prices). Here are some common techniques for
data exploration and visualization :-

(1) Summary Statistics :- Compute descriptive statistics such as mean, median, standard
deviation, minimum, and maximum for numerical features like bedrooms, bathrooms,
square footage, and more. This provides an overview of the dataset and helps identify
any anomalies or inconsistencies.

(2) Histograms: Plot histograms to visualize the distribution of numerical features such as
square footage, bedrooms, and bathrooms. This allows you to identify the central
tendency, spread, and shape of the data.

(3) Box Plots: Create box plots to visualize the distribution of numerical features and identify
any outliers. Box plots provide information about the median, quartiles, and potential
outliers in the data.

(4) Correlation Matrix: Compute the correlation between numerical features and the target
variable (house prices) using techniques such as Pearson's correlation coefficient.
Visualize the correlation matrix using a heatmap to identify the strength and direction of
relationships between features and prices.

(5) Scatter Plots: Generate scatter plots to explore the relationship between numerical
features and house prices. For example, plot the square footage against house prices or
the number of bedrooms against house prices. Scatter plots help identify patterns,
trends, and potential non-linear relationships.
(6) Bar Plots: Create bar plots to visualize the relationship between categorical features
such as waterfront view, condition, or grade, and house prices. This helps understand
how different categories influence the prices.

(7) Geospatial Visualization: Utilize latitude and longitude coordinates to create geospatial
visualizations such as scatter plots on a map. This can help identify spatial patterns in
house prices and understand how prices vary across different locations.

(8) Time Series Analysis: If the dataset includes a time-related feature (e.g., date of sale),
perform time series analysis to observe trends, seasonality, or any temporal patterns in
house prices.

● Feature Interactions: Explore interactions between features by creating scatter plots or

other visualizations that show how two or more features combine to affect house prices.
This can provide insights into non-linear relationships and interactions among variables.

FEATURES ENGINEERING

● Feature engineering plays a crucial role in enhancing the performance of a model for
predicting house prices. It involves selecting relevant features, creating new features,
and applying transformations to existing features. Here are some common feature
engineering techniques :-

(1) Feature Selection :-

● Selecting the most relevant features can improve model performance and reduce
computational complexity. This can be done using techniques such as correlation
analysis, feature importance from tree-based models, or domain knowledge.

● For example, you can use correlation analysis to identify features strongly correlated
with house prices and retain those with high correlation coefficients. Features like square
footage, number of bedrooms, and bathrooms are often highly correlated with house
prices

(2) Interaction Features :-

● Create new features by combining or interacting existing features. This can capture
non-linear relationships and interactions between variables.

● For example, you can create an "Age of the House" feature by subtracting the year built
from the current year. This feature may capture the impact of house age on prices, as
older houses might have different price dynamics compared to newer ones.
(3) Polynomial Features :-

● Generate polynomial features by taking the power of existing features. This can help
capture nonlinear relationships between features and the target variable.
For instance, you can include squared or cubed versions of features like square footage
to account for potential non-linear relationships with house prices.

(4) Logarithmic Transformations :-

● Apply logarithmic transformations to features or the target variable to handle skewness

or non-linear relationships.

(5) Binning or Discretization :-

● Transform continuous features into discrete categories by dividing them into bins or
intervals. This can capture non-linear relationships and reduce the impact of outliers.

(6) One-Hot Encoding:

● Convert categorical features, such as waterfront view or property condition, into binary
indicator variables using one-hot encoding. This allows the model to effectively capture
categorical information.

MODEL SELECTION AND TRAINING :-

● Model selection and training are crucial steps in the "Predicting House Prices" project.
Here are the steps involved:

(1) Splitting the Dataset :-

● Divide the dataset into training and testing subsets. The typical split is 70-30 or 80-20,
where the majority of the data is used for training the model, and the remaining portion is
reserved for evaluating its performance.

(2) Choosing the Evaluation Metric :-

● Select an appropriate evaluation metric to assess the performance of different models.

Common metrics for regression tasks include mean squared error (MSE), root mean
squared error (RMSE), mean absolute error (MAE), and R-squared.

(3) Model Selection :-

● Explore various regression algorithms suitable for predicting house prices. Some
commonly used models include :-

(1) Linear Regression: A simple and interpretable model that assumes a linear relationship
between features and target variable.
(2) Decision Trees: Tree-based models that capture non-linear relationships and interactions
among features.
(3) Random Forest: An ensemble of decision trees that reduces overfitting and provides
robust predictions.
(4) Gradient Boosting: A boosting algorithm that combines multiple weak learners to create
a strong predictive model.
(5) Support Vector Machines (SVM): A model that finds the best hyperplane to separate
data points and make predictions.

MODEL TRAINING :-

● Train the selected model on the training dataset. The model learns the patterns and
relationships between the features and the target variable during this process.
Provide the model with the training features and corresponding target values (house
prices) for learning.

● Model Evaluation :-

● Evaluate the trained model's performance on the testing dataset using the chosen
evaluation metric(s).

● Compare the performance of different models to select the one with the best predictive
ability.

● Hyperparameter Tuning :-

● Adjust the model's hyperparameters to optimize its performance. Hyperparameters

control the behavior of the model, such as the learning rate, number of estimators (in
ensemble models), and regularization parameters.

● Utilize techniques like grid search, random search, or Bayesian optimization to explore
different hyperparameter combinations and identify the optimal set of hyperparameters.

● Cross-Validation:
● Perform cross-validation to obtain more robust estimates of the model's performance.
Techniques like k-fold cross-validation split the data into multiple folds, allowing the
model to be trained and evaluated on different subsets of the data.

● Model Refinement :-

● Iterate on the model selection, training, and evaluation steps by trying different models,
feature engineering techniques, or preprocessing strategies to improve the model's
performance.

THANK YOU 😊