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Is What You See What You Get? The Value of Natural Landscape Views

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  • Walls, Margaret

    ()
    (Resources for the Future)

  • Kousky, Carolyn

    ()
    (Resources for the Future)

  • Chu, Ziyan

    ()
    (Resources for the Future)

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    Abstract

    Modern geographic information system (GIS) tools have allowed a more careful examination of how the physical characteristics of a property’s neighborhood and surrounding land uses are capitalized into property values. The ArcGIS Viewshed tool is a case in point: it identifies the cells in an input raster that can be seen from one or more observation points. In this study, we use the tool in a hedonic property value model that estimates a home’s sale price as a function of the percentage of its view that encompasses various “green” land covers—forest, farmland, and grassy recreational lands—as well proximity to such green spaces. We use 25 years of data from St. Louis County, Missouri, along with land cover data from 1992, 2001, and 2006, to estimate a property fixed-effects model. This approach, which minimizes the bias from omission of time-constant unobservable variables, is a methodological advance over some prior studies of the value of a view. We find that forest views negatively affect home prices, whereas farmland and grassy area views have positive effects (though only the farmland results are statistically significant). Proximity to each of these types of lands has value, however: more of each type in a close buffer around the property increases the property’s sale price. We hypothesize that our results are related to two factors: the topography of the study area and the fact that farmland has been converted to development over time, leading to a relative increase in its value.

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    Bibliographic Info

    Paper provided by Resources For the Future in its series Discussion Papers with number dp-13-25.

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    Date of creation: 02 Aug 2013
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    Handle: RePEc:rff:dpaper:dp-13-25

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    Related research

    Keywords: hedonic pricing; view; open space; land cover; geographic information systems;

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    References

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    1. Robert W. Paterson & Kevin J. Boyle, 2002. "Out of Sight, Out of Mind? Using GIS to Incorporate Visibility in Hedonic Property Value Models," Land Economics, University of Wisconsin Press, vol. 78(3), pages 417-425.
    2. Livy, Mitchell & Klaiber, H. Allen, 2013. "Maintaining Public Goods: Household Valuation of New and Renovated Local Parks," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150634, Agricultural and Applied Economics Association.
    3. Acharya, Gayatri & Bennett, Lynne Lewis, 2001. "Valuing Open Space and Land-Use Patterns in Urban Watersheds," The Journal of Real Estate Finance and Economics, Springer, vol. 22(2-3), pages 221-37, March-May.
    4. Baranzini, Andrea & Schaerer, Caroline, 2011. "A sight for sore eyes: Assessing the value of view and land use in the housing market," Journal of Housing Economics, Elsevier, vol. 20(3), pages 191-199, September.
    5. Kenneth Y. Chay & Michael Greenstone, 1998. "Does Air Quality Matter? Evidence from the Housing Market," NBER Working Papers 6826, National Bureau of Economic Research, Inc.
    6. Patrick Bajari & Jane Cooley Fruehwirth & Kyoo il Kim & Christopher Timmins, 2012. "A Rational Expectations Approach to Hedonic Price Regressions with Time-Varying Unobserved Product Attributes: The Price of Pollution," American Economic Review, American Economic Association, vol. 102(5), pages 1898-1926, August.
    7. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    8. Benson, Earl D, et al, 1998. "Pricing Residential Amenities: The Value of a View," The Journal of Real Estate Finance and Economics, Springer, vol. 16(1), pages 55-73, January.
    9. Okmyung Bin & Thomas W. Crawford & Jamie B. Kruse & Craig E. Landry, 2008. "Viewscapes and Flood Hazard: Coastal Housing Market Response to Amenities and Risk," Land Economics, University of Wisconsin Press, vol. 84(3), pages 434-448.
    10. Steven C. Bourassa & Martin Hoesli & Jian Sun, 2003. "What’s in a View?," FAME Research Paper Series rp79, International Center for Financial Asset Management and Engineering.
    11. Carolyn Kousky, 2010. "Learning from Extreme Events: Risk Perceptions after the Flood," Land Economics, University of Wisconsin Press, vol. 86(3).
    12. Devin G. Pope & Jaren C. Pope, 2012. "When Walmart Comes to Town: Always Low Housing Prices? Always?," NBER Working Papers 18111, National Bureau of Economic Research, Inc.
    13. Palmquist, Raymond B., 1982. "Measuring environmental effects on property values without hedonic regressions," Journal of Urban Economics, Elsevier, vol. 11(3), pages 333-347, May.
    14. Elena G. Irwin, 2002. "The Effects of Open Space on Residential Property Values," Land Economics, University of Wisconsin Press, vol. 78(4), pages 465-480.
    15. Straszheim, Mahlon R, 1974. "Hedonic Estimation of Housing Market Prices: A Further Comment," The Review of Economics and Statistics, MIT Press, vol. 56(3), pages 404-06, August.
    16. Tyrvainen, Liisa & Miettinen, Antti, 2000. "Property Prices and Urban Forest Amenities," Journal of Environmental Economics and Management, Elsevier, vol. 39(2), pages 205-223, March.
    17. Jean Cavailhès & Thierry Brossard & Jean-Christophe Foltête & Mohamed Hilal & Daniel Joly & François-Pierre Tourneux & Céline Tritz & Pierre Wavresky, 2009. "GIS-Based Hedonic Pricing of Landscape," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 44(4), pages 571-590, December.
    18. Kuminoff, Nicolai V. & Parmeter, Christopher F. & Pope, Jaren C., 2010. "Which hedonic models can we trust to recover the marginal willingness to pay for environmental amenities?," Journal of Environmental Economics and Management, Elsevier, vol. 60(3), pages 145-160, November.
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