In machine learning, there’s never a single way to solve a problem. You have limitless options when deciding how to pre-process your data and which algorithms to use. Often combining multiple approaches will give you better results than any single approach.
The three-step algorithm I described is called multivariate linear regression. You are estimating the equation for a line that fits through all of your house data points. Then you are using that equation to guess the sales price of houses you’ve never seen before based where that house would appear on your line. It’s a really powerful idea and you can solve “real” problems with it.