ABSTRACT
This chapter begins by pointing out the difference between correlation and regression analysis, as past experience has revealed that many students are unable to differentiate between the two concepts. It explains the concepts underlying the theoretical regression model, the population regression function, and its representation in estimation, the sample regression function, and the ordinary least squares estimation. The chapter presents the fundamentals of regression analysis by studying the single-equation linear regression model (also referred to as univariate or bivariate regression models). The theoretical notions are accompanied by illustrative examples so that the reader achieves a strong grasp of the notions and applications of regression to real estate. The chapter introduces the reader to regression analysis, a fundamental method in applied quantitative work in real estate. Regression analysis enables us to determine the nature of relationships and test various propositions in practice. The chapter contains a discussion of simple regression analysis, covering several statistics that have to be interpreted.
