You wish to predict the sale price of single-family

Question

You wish to predict the sale price of single-family residences in Massachusetts using property features (commonly called a "hedonic pricing model"). You collect price and property features data on properties sold in the state for the year 2010 and obtain the following regression:

Price_i = 14407.60 - 759.92*houseage_i + .24*lotsize_i + 354.35*bldarea_i + 12015.61*rooms_i + µ_i

(6433.23) (89.67) (.115) (265.39) (8516.47)

Observations = 2691 R² = 0.49 F = 65.10

Where:

houseage = age of the house (in years)

lotsize = total square feet of the land

bldarea = total square feet of the interior of the house

rooms = total number of rooms in the house

What is the interpretation of the constant term in this regression? Why is it included?