Alright, we’re going to try and predict housing prices. The goal is to predict the final sale price of residential homes in Ames, Iowa based on information about the house.

The score is judged on the root mean squared error (RMSE) of the log sale price, and my submission scores in the top 13% of results (as of May 2020). This script takes approximately 8 minutes to execute.

The training data has 1460 observations, and the test data has 1459 observations. There are a total of 79 predictors, not including the house ID, which are described in detail here.

```
test <- read.csv("test.csv")
train <- read.csv("train.csv")
```

Let’s tidy up the dataset before diving into anything else.

- Remove IDs from training and test datasets for cleaner model formulas.
- Take the log of SalePrice in the training data, to match the evaluation method.
- MSSubClass (the type of dwelling involved in the sale) and MonthSold are numeric but should be factors.
- Test data has a house with MSSubClass = 160, but this factor level does not exist in the training data. We recode the 160 value (2-Story PUD) into its closest approximation, 150 (1-1/2 Story PUD).

- Fix a typo in GarageYrBlt (changed 2207 to 2007)
- If YearRemodAdd (remodel date) is after YrSold (year sold), set YearRemodAdd to YrSold.

```
## separate IDs
id_train <- train$Id
procTrain <- train[, -1]
id_test <- test$Id
procTest <- test[, -1]
## use log of sale price
procTrain$SalePrice <- log(procTrain$SalePrice)
## convert factor variables to factors
procTrain$MSSubClass <- as.factor(procTrain$MSSubClass)
procTest$MSSubClass <- as.factor(procTest$MSSubClass)
procTrain$MoSold <- as.factor(procTrain$MoSold)
procTest$MoSold <- as.factor(procTest$MoSold)
# recode factor level 150 into 160 in test MSSubClass (exists in test but not train)
procTest$MSSubClass <- fct_collapse(procTest$MSSubClass, '160' = c('150', '160'))
# fix typo in GarageYrBlt
procTest$GarageYrBlt <- ifelse(procTest$GarageYrBlt == 2207, 2007, procTest$GarageYrBlt)
# fix typo in YearRemodAdd
procTest$YearRemodAdd <- ifelse(procTest$YearRemodAdd > procTest$YrSold,
procTest$YrSold,
procTest$YearRemodAdd)
procTrain$YearRemodAdd <- ifelse(procTrain$YearRemodAdd > procTrain$YrSold,
procTest$YrSold,
procTest$YearRemodAdd)
```

Continuous values that are missing are imputed with bagged trees: for each predictor a bagged tree is created using all of the other predictors, and the bagged model is used to predict missing values. The continuous variables that have missing values are:

- LotFrontage (train: 259, test: 227)
- MasVnrArea (train: 8, test: 15)
- GarageYrBlt (train: 81, test: 78)
- BsmtFinSF1 (test: 1)
- BsmtFinSF2 (test: 1)
- BsmtUnfSF (test: 1)
- TotalBsmtSF (test: 1)
- BsmtFullBath (test: )
- BsmtHalfBath (test: 2)
- GarageCars (test: 1)
- GarageArea (test: 1)

```
### missing values
#summary(is.na(procTrain))
#summary(is.na(procTest))
# impute missing continuous values with bagged trees
full_data <- rbind(procTrain[, -80], procTest)
numeric_cols <- which(map_lgl(full_data, is.numeric))
set.seed(1001)
bagImpute <- preProcess(full_data[, numeric_cols], method = "bagImpute")
procTrain[, numeric_cols] <- predict(bagImpute, procTrain[, numeric_cols])
procTest[, numeric_cols] <- predict(bagImpute, procTest[, numeric_cols])
rm(bagImpute)
```

There are two types of missing values from discrete variables: those that represent an “other” category, and those that are truly missing.

For missing values that represent an “other” category, we create a new factor level to represent that category. For those that are truly missing, we impute missing values with the most common value from all other observations.

```
#### convert missing factor values into an "other" type if appropriate
add_fctlevel <- c("Alley", "BsmtQual", "BsmtCond", "BsmtExposure", "BsmtFinType1", "BsmtFinType2",
"FireplaceQu", "GarageType", "GarageFinish", "GarageQual", "GarageCond",
"PoolQC", "Fence", "MiscFeature")
procTrain[, add_fctlevel] <- map_df(procTrain[, add_fctlevel], addNA)
procTest[, add_fctlevel] <- map_df(procTest[, add_fctlevel], addNA)
### impute missing factor values into most common category for all other factors
imp_fctlevel <- c("MasVnrType", "Electrical", "MSZoning", "Utilities", "Exterior1st", "Exterior2nd", "KitchenQual", "Functional", "SaleType")
# function to return mode
Mode <- function(x) {
ux <- unique(x)
ux[which.max(tabulate(match(x, ux)))]
}
for (fct in imp_fctlevel) {
procTrain[[fct]][is.na(procTrain[[fct]])] <- Mode(full_data[[fct]])
procTest[[fct]][is.na(procTest[[fct]])] <- Mode(full_data[[fct]])
}
rm(Mode, fct, add_fctlevel, imp_fctlevel)
```

- Ordinal categorical variables are
**converted to numeric**to allow for discovery of more complex relationships between levels. - Continuous variables are treated with a
**box-cox transformation, centering, and scaling**for more stable modeling. - A separate train/test dataset are created by
**one-hot-encoding categorical variables**so that they’re properly represented as dummy variables.

```
### convert ordered factors to numeric
ordered_factors <- c("Alley", "LotShape", "Utilities", "LandSlope",
"ExterQual", "ExterCond", "BsmtQual", "BsmtCond", "BsmtExposure",
"BsmtFinType1", "BsmtFinType2", "HeatingQC", "KitchenQual",
"Functional", "FireplaceQu", "GarageFinish", "GarageQual",
"GarageCond", "PavedDrive", "PoolQC", "Fence")
procTrain[, ordered_factors] <- map_df(procTrain[, ordered_factors], as.numeric)
procTest[, ordered_factors] <- map_df(procTest[, ordered_factors], as.numeric)
### apply boxcox, center, and scale to continuous values
trainTrans <- preProcess(procTrain[, numeric_cols],
method = c("BoxCox", "center", "scale"))
procTrain[, numeric_cols] <- predict(trainTrans, procTrain[, numeric_cols])
testTrans <- preProcess(procTest[, numeric_cols],
method = c("BoxCox", "center", "scale"))
procTest[, numeric_cols] <- predict(testTrans, procTest[, numeric_cols])
rm(trainTrans, testTrans, ordered_factors)
### one-hot encode factors
treatplan <- designTreatmentsZ(procTrain, names(procTrain[-80]),
minFraction = 0.01, rareCount = 0, verbose = FALSE)
procTrainEnc <- prepare(treatplan, dframe = procTrain, codeRestriction = c("clean", "lev"))
procTestEnc <- prepare(treatplan, dframe = procTest, codeRestriction = c("clean", "lev"))
procTrainEnc$SalePrice <- procTrain$SalePrice
```

We will fit an elastic net model, MARS model, and polynomial SVM on the one-hot-encoded data. Stochastic gradient boosting will be performed on the data that is not one-hot-encoded, because one-hot encoding can lead to decreased performance in decision tree-based models.

Models will be evaluated with the average of 10-fold cross-validation errors, repeated 3 times. The cross-validation folds will be shared across all models for comparison later on. Model tuning and hyperparameter selection have been completed separately to decrease the amount of time it takes to run this script.

```
set.seed(202005181)
ctrl <- trainControl(method = "repeatedcv",
number = 10,
repeats = 3,
index = createMultiFolds(procTrain$OverallQual, k = 10, times = 3),
savePredictions = "final")
```

Fitting an elastic net model leads to an average 10-fold cross-validation RMSE of .1286.

This model considers the total above ground living area (GrLivArea), followed closely by the neighborhood the house is located (neighborhood) and its overall quality (OverallQual) as the most important contributors to sale price.

```
# glmnet RMSE: 0.1285798
glmGrid <- expand.grid(.alpha = .8,
.lambda = 0.005263158)
set.seed(20200518)
glmModel <- train(SalePrice ~ .,
procTrainEnc,
method = "glmnet",
tuneGrid = glmGrid,
verbose = FALSE,
trControl = ctrl)
glmModel
```

```
## glmnet
##
## 1460 samples
## 182 predictor
##
## No pre-processing
## Resampling: Cross-Validated (10 fold, repeated 3 times)
## Summary of sample sizes: 1313, 1314, 1315, 1315, 1314, 1314, ...
## Resampling results:
##
## RMSE Rsquared MAE
## 0.1285798 0.8944249 0.0834132
##
## Tuning parameter 'alpha' was held constant at a value of 0.8
## Tuning
## parameter 'lambda' was held constant at a value of 0.005263158
```

`plot(varImp(glmModel), top = 20, main = "Variable Importance: Elastic Net")`