Testing the Waters: A Spatial Econometric Pricing Model of Different Waterfront Views

This study contrasts the pricing of waterfront view amenities in a South Carolina lakefront community between the bubble and the post-bubble phases of the real estate cycle. Testing for spatial autocorrelation reveals the asymmetrical operation of spatial processes between the two periods. We find that empirical results for quality of view, view aspect orientation, and origin of buyer are affected by the recession. Specifically, prices for non-premium view properties suffer disproportionately. These results are confirmed by the construction of a spatial error model that provides an improved fit compared to a standard OLS spatial model.