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Some evidence suggests that coastal properties, particularly those proximate to a beach, have outperformed most real estate market segments over the past decade. Less understood is the relative importance of the property and locational characteristics that drive the selling prices of coastal properties. This information is useful to appraisers, investors, developers, and taxing jurisdictions as well as to consumers. This article examines the differences in sale prices of properties in the Stone Harbor and Avalon, New Jersey, markets from January 2002 through June 2003, and finds a much steeper value gradient for proximity than has been found in prior studies focusing solely on water views.
Appraisers have the difficult assignment of estimating how individual property and market characteristics contribute to price. Location is one such characteristic, of which proximity to negative and positive externalities is a key component. The literature is rich with studies that provide empirical estimates of the impact of proximity to amenities such as schools,1 golf courses,2 parks,3 and views,4 and potential disamenities such as airport noise,5 overhead transmission lines,6 and toxic waste sites.7 Estimates of the impacts of these kinds of location-specific characteristics are needed by appraisers to arrive at the kind of informed valuation conclusions relied upon by buyers, sellers, lenders, and taxing jurisdictions.
The location attribute examined in this study is proximity to a beach. Much casual and less-empirical evidence suggests that coastal properties, and particularly those proximate to a beach, have outperformed most real estate market segments over the past decade. Less understood is the relative importance of the property and location characteristics that drive selling prices in these markets. Prior research has focused mainly on the impact of water views. Plattner and Campbell8 measured the impact of a water view on the prices of new condominiums in western Massachusetts. They found view premiums of 4%-12% and that the percentage premium tended to be higher for lower-priced units. Gillard9 found a 9% view premium in Los Angeles, and Seiler, Bond, and Seiler10 found a 56% premium for a view of Lake Erie. The study presented here comes closest to the works of Benson et al;11 Benson, Hansen, and Schwartz;12 and Rinehart and Pompe.13 Benson et al and Benson, Hansen, and Schwartz found that in the Bellingham,...