1.

Introduction

This Software Requirements Specification (SRS) document outlines the requirements for a
system that utilizes machine learning to predict house prices. The system will be a valuable tool
for various stakeholders in the real estate market, including:

 Potential Homebuyers: Estimate the value of houses they are interested in, allowing for more
informed decisions and budget planning.
 Sellers: Gain insights for competitive pricing strategies, potentially maximizing their profit
margins.
 Real Estate Agents: Enhance client services by providing data-driven recommendations and
valuations.
2. Overall Description

The system will function as a house price prediction tool leveraging machine learning algorithms.
Users will input data on various house attributes, and the system will predict a corresponding
house price. The data can be collected from various reliable sources and may include the
following features:

 Location: City, neighborhood (postal code can also be considered)

 Property Characteristics: Square footage, number of bedrooms and bathrooms, number of
floors, year built
 Lot Size: Total area of the property
 Amenities: Garage, pool, fireplace, central air conditioning
 School District Quality: Ratings or rankings (if available)
The system will analyze the data to identify patterns and relationships between these features and
historical house prices. This analysis will allow the system to learn and predict house prices for
new, unseen properties.

3. Specific Requirements

3.1 Data Acquisition

 Data Sources: The system should be able to import data from various sources, including:
o CSV files (comma-separated values)
o Real estate APIs (consider security implications for API access, like authentication and
authorization)
 Data Characteristics:
o The data should encompass a wide range of locations (cities, suburbs, rural areas) and property
types (single-family homes, condos, apartments) to enhance the generalizability of the model.
o The system should handle data updates to incorporate the latest market trends (consider
implementing a data refresh mechanism).
3.2 Data Preprocessing
 Data Cleaning: The system should identify and address issues in the data, such as:
o Missing values: Implement techniques like imputation (filling missing values with estimated
values) or deletion (removing rows with excessive missing data).
o Outliers: Identify and handle data points that deviate significantly from the norm. Strategies can
include winsorization (capping outliers to a certain value) or removal if justified.
o Inconsistencies: Ensure data formatting consistency (e.g., standardize units for area
measurements).
 Feature Engineering: The system should explore creating new features from existing ones to
potentially improve model performance. Examples include:
o Combining square footage and number of bedrooms into a "living space" metric.
o Creating binary features for amenities (presence or absence).
3.3 Model Training

 Machine Learning Algorithms: The system should support various machine learning
algorithms suitable for regression tasks, such as:
o Linear Regression: Establishes a linear relationship between features and price.
o Random Forest: Creates an ensemble of decision trees, improving prediction accuracy and
robustness.
o Gradient Boosting: Sequentially builds models by focusing on errors from previous models,
potentially leading to higher accuracy.
 Hyperparameter Tuning: Users should be able to choose the desired algorithm and adjust its
hyperparameters to optimize model performance. Hyperparameters are settings within the
algorithm that can influence its behavior (e.g., number of trees in a random forest). The system
can provide default values or allow manual adjustments.
3.4 Model Evaluation

 Evaluation Metrics: The system should evaluate the performance of trained models using
industry-standard metrics for regression tasks, including:
o Mean Squared Error (MSE): Measures the average squared difference between predicted and
actual prices. Lower MSE indicates better performance.
o R-squared: Represents the proportion of variance in the target variable (price) explained by the
model. Higher R-squared suggests a better fit.
 Model Comparison: The system should allow users to compare the performance of different
models based on the evaluation metrics. This enables users to select the model that best predicts
house prices for their specific needs.
3.5 Prediction

 User Input: Users should be able to input new house attribute data for a property they are
interested in. The system should provide a user-friendly interface for data entry, potentially
including dropdown menus or text boxes with clear instructions.
 Price Prediction: The system will utilize the chosen trained model to predict a house price based
on the user-provided data.
 Confidence Intervals: The system should display confidence intervals alongside the predicted
price. Confidence intervals indicate a range of values within which the actual house price is likely
to fall with a certain level of confidence (e.g., 9