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Cluster Analysis
Summary
Summary of this paper
US housing market has lot of price variations from region to region and housing associations. There are many variables which effects the housing market pricing This paper focuses on the geography of U.S. residential housing markets, the role of housing attributes in the residential housing markets pricing Data is collected for 26 cities and analysis is done on 10 variables which have can impact housing market pricing
Objective of this paper Clustering analysis is used to identify the geographic pattern of U.S. residential housing markets using American Housing Survey (AHS) data Basing on the housing prices and other relevant variables, using K-means clustering analysis residential housing markets should be grouped Identify price variation is due to housing associations or based on region though cluster analysis
Variables
Following list of attributes/ variables are identified that are effecting housing industry
Critical Element
The residential housing markets is classified into three groups based on housing prices, unemployment rate, household income, dwelling size, housing unit quality and neighborhood quality The distance measure is used to distinguish the similarity of objects in the 10-dimensional space, and objects with the least distances are combined together The Frequency column indicates the number of objects in the cluster. SPRSQ column exhibits the semi partial R-square, which is the proportion of variance reduced by joining the two clusters.
Conclusions
The clustering analysis rejects the hypothesis that the housing market associations between cities are random, and finds strong evidences of regional differences in housing price variations Geographical differences of housing attributes effects across cities has interrelationship of housing prices across cities Cluster 1: Best unit qualities, low economy and neighborhood qualities. The developments in these areas are relatively slow and the pressure on land use is small. Cluster 2: Relatively higher house prices, lower unemployment rate, and higher household incomes compared to cities in the first category. Cities are closer to the coasts and are economically more developed than cities in Group 1. As an effect, the dwelling sizes are smaller and quality levels are lower than those of Cluster 1. Cluster 3. Large coastal cities, prices levels high. Rapid economic development unemployment rates are low and household incomes are high in these areas. Dwelling qualities and neighborhood qualities are not as high as those in other areas, and the units are typically small.