The Pricing of Lake Lots

This article reveals aspects of lakefront property pricing especially with respect to lot frontage and depth. A clearer understanding of how these lot dimensions affect price should be of interest to those engaged in lake development, land use control, valuation, and marketing. A data set with eighty observations of vacant Lake Michigan residential properties sales is used. The unique geography of northwest Michigan provides an opportunity to tackle empirical issues associated with zoning when zoning is correlated with lot attributes, such as lot topography.     

The Construction of Residential Housing Price Indices: A Comparison of Repeat-Sales,Hedonic-Regression,and Hybrid Approaches

This article examines a number of hypotheses that underpin the repeat-sales and hedonic approaches to the construction of housing price indices, as well as the practical problems associated with the implementation of either approach. We also examine a hybrid procedure that combines elements of both the repeat-sales and hedonic-regression techniques. For our sample of individual home sales in Oakland and Fremont California over an 18-year period, repeat-sales methods are subject to sample selection bias; the maintained assumption of time constancy of implicit prices of housing attributes is violated; the repeat-sales estimator is extremely sensitive to influential observations; and the usual method used to correct for heteroskedasticity in repeat-sale housing returns is inappropriate in our sample. Hedonic techniques are better suited to contend with index number problems per se, as they can accommodate changing attribute prices over time. They also appear to give rise to more reliable estimates of price indices, as unusual observations have less effect on estimated price indices. Drawbacks of the hedonic approach include the usual concern with omitted attributes, and their effect on the estimated price index.     

The Use of Census Data for Hedonic Price Estimates of Open-Space Amenities and Land Use

Hedonic price models for determining marginal implicit prices of open-space amenities and nonresidential land use were estimated using housing data from the census. Alternative model specifications were compared to evaluate the effects of aggregating land-use data by alternative levels of census geography as well as the use of different sample sizes of census blocks. It was determined that land use is best aggregated at the block group level and that entire populations or very large sample sizes of census blocks should be used with hedonic models.     

Transportation Improvements and Land Values in the Antebellum United States: A Hedonic Approach

We offer county-level estimates of the effect of water and rail access on the value of antebellum farms. Employing a hedonic model, we find that in 1850 average farm values in counties with access to a canal or navigable river were $2.68 per acre greater than counties without such access and $1.80 greater with rail access. In 1860 the figures were $3.75 for a canal or river access and $1.35 for rail. With average farm size around 200 acres and per capita national income roughly $150 during the decade, we conclude that on average transportation access yielded substantial economic gains.     

The Influence of Riparian Protection Measures on Residential Property Values: The Case of the Oregon Plan for Salmon and Watersheds

The Oregon Plan for Salmon and Watersheds encourages residential property owners to plant riparian buffers in an effort to reduce stream temperature and thus improve fish habitat. This study estimates the change in the value of streamside residential properties in response to planting a treed riparian buffer. A hedonic pricing analysis suggests that treed riparian buffers reduce the market value of stream-front residential property in the study area.     

The Value of Smoking Prohibitions in Vacation Rental Properties

We examine the value of smoking prohibitions by developing a model of the rent differential between smoking and nonsmoking properties. We empirically test for the rent differential using a data set of vacation rental properties from the Outer Banks of North Carolina. Given peak season rents, hedonic variables such as oceanfront location, and number of bedrooms and bathrooms price according to expectations. Distance from vehicular congestion also leads to greater rent, reflecting vacationer desires for beauty as well as peace and quiet. Most significantly, our results reveal that vacationers are willing to pay substantial additional rent for properties that prohibit smoking. Understanding the demand for smoking prohibitions is important to academics, professionals, and others associated with owning, operating, and financing real estate.     

Value indices of commercial real estate: A comparison of index construction methods

The purpose of this paper is to shed light on the history of commercial property values over the past decade, and to compare different methods of constructing commercial property value indices and returns series. We examine three types of indices: (i) Indices that attempt to reconstructproperty market values by unsmoothing the appraisal-based Russell-NCREIF Index; (ii) Indices that trace average ex posttransaction prices of commercial property over time; and (iii) an index based onunlevering REIT share prices. By comparing the different historical pictures that result from the various index construction methodologies, one gains insight into the nature of commercial property price and valuation behavior. The REIT-based values lead the other indices in time but display greater short-run volatility. The transactions-based indices lag behind the other series in time, and are consistent with the idea that institutional investors attempt to hold onto properties until they can sell them for a price at least equal to the current appraised value, in effect trading off liquidity for reduced volatility.     

The Impact of Small Brownfields and Greenspaces on Residential Property Values

Using a hedonic pricing model, this paper investigates the responsiveness of residential property values in a well-defined inner-city neighborhood of Kenosha, Wisconsin, to the presence of two small former industrial sites contaminated by various environmental pollutants, or brownfields, and a local neighborhood park, or greenspace. Using readily available data on sales and assessments for residential property in close proximity to the brownfields and the greenspace, we estimate well-behaved and statistically significant property value gradients with respect to the park, the environmental amenity, and the brownfields, the environmental disamenities. These functions are then used to estimate the possible impact that brownfield remediation may have on total property value. We estimate that remediation and redevelopment of the brownfields into greenspaces would increase property values for the 890 neighborhood residences between $2.40 and $7.01 million. These results suggest that small brownfields have a measurable impact on property values and that readily accessible data can be used to help local policymakers make decisions on remediation issues.     

The economic impact of a transient hazard on property values: The 1988 Pepcon explosion in Henderson,Nevada

This article investigates the effect of the May 1988 explosion of a chemical plant in Henderson, Nevada on residential property values (1) before the explosion (anticipation), (2) between the time of the explosion and an announcement of relocation, and (3) subsequent to an announcement in July 1988 that the plant would be rebuilt 100 miles away in Cedar City, Utah. This article uses the conventional hedonic model wherein the real prices of residential houses are related to the characteristics of the property (age, size, and amenities); the timing of the sale; and distance from the site of the explosion, rounded to the nearest mile. A quadratic specification of the model showed that the model was sensitive to the mean distance from the hazard. In a sample of properties throughout the Las Vegas Valley, property values decreased with distance from the explosion, indicating the presence of other hazards. The quadratic specification was stable only for properties within six miles of the explosion site, which included the communities of old Henderson (to the east) and the master planned community of Green Valley (to the west). A discontinuous specification of the model, in which distance was measured by a set of dummy variables (i.e., within two miles, within three miles, etc.) proved to be much more stable. Property within two miles of the hazard were depressed both before and after the explosion, although after the relocation announcement, property values rebounded to reflect the reduction in the number of hazardous plants. This article lends weight to the accumulating body of evidence that real estate markets do behave efficiently.