An application of factor analysis to housing market

Housing market is a prodigious system composed by numerous complex factors which are influencing and associating with each other. The process of establishing the model frame can be simplified by dividing the prodigious system into several subsystems effectively. This paper uses several common factors to describe the correlation among the numerous complex factors by factor analysis model based on multivariate statistical analysis of data simplification and dimensionality reducing. Each common factor which is abstracted can be considered to be a subsystem of the housing market.