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This study is an examination of the impact of a water view exposure on the value of single family homes. The authors developed a database of 6,949 home sales of 4,931 different residences over the 1984 to 1993 time period in Bellingham, Washington. Each home's view exposure was determined by personal inspection and each view was graded by its quality of exposure. Depending on the quality, a water view increased a home's value by 8% to 59% in the Bellingham market in 1993. Lake frontage increased a home's value by 126% compared to a nonview, nonfrontage home. Additionally, it is found that the value of a water view varies inversely with the home's distance from a body of water. in general, the results suggest that appraisers should carefully examine a home's water view when estimating its value.
Conventional wisdom holds that a good view adds to the desirability and market value of a single-family home. One method of assessing the value of a view in a particular market is regression analysis, which allows a statistical comparison between homes with a view and similar homes with no view A good example of this approach is given by Rodriguez and Sirmans (1994) in a paper that analyzes the impact of a view on the value of homes in Fairfax county, Virginia. Using a sample of 194 homes, Rodriguez and Sirmans find that a good view (as defined by the county tax appraiser) adds about 8% to a home's value. On balance, studies using regression methodology to assess the value of a view (earlier studies include Davies [1974], Brown and Pollakowski [1977], Morton [1977], Correll et al. [1978], Plattner and Campbell [1978], Gillard [1981], and Do and Sirmans [1994]) have found that a view home is worth about 5% to 10% more than a nonview home with similar characteristics.
One issue not addressed by most of these studies is the extent to which different views command differing market premiums. In an area with water views, for example, it may be the case that some view properties have more open and less obstructed views than do other view properties. Assuming that a more open exposure provides a more desirable view, a regression model that groups all...