See attached files.
This econometric model will test the realtor's theory that location is the most important factor in determining the value of a home. Simply stated this theory is 'location, location, location'. To test this hypothesis, include variables that estimate the value of the home by the home's characteristics (e.g., number of rooms or bathrooms) and the neighborhood's characteristics (e.g., noise, traffic, crime). Justify which variables are include in this model and evaluate the overall fit of the econometric model to the simple theory put forth by the real estate industry.
Step by step method for regression analysis is discussed here. Regression coefficients, coefficient of determination, scatter diagram and significance of regression model are explained in the solution.