Second home real estate market : economic analysis of residential pricing behavior near Heavenly Ski Resort, CA

This paper examines a second home market near Heavenly Ski Resort in South Lake Tahoe, CA to understand historical pricing behaviors and to forecast future prices using an econometric model derived from economic, demographic, and climate data. In order to do this study, we gathered historical residential sales data from 1988 to 2008 for the study area, which is limited to residential houses located within a one-mile radius of the resort. Moreover, other external variables, such as Tahoe skier visits, natural snowfall, San Francisco Bay Area income and employment, and mortgage interest rates, were collected for the same time period to determine how these variables influenced the prices. First, using approximately 550 residential sales data, a price index was created and subsequently historical residential home pricing behaviors were analyzed. Typically, evaluation of house prices is difficult since each residential property is a composite of goods that contain varying amounts of attributes. Therefore, the hedonic house price model was applied to recognize and remove effects of the housing-specific attributes on pricing. As a result, the real price index tracks only real prices as a function of time. Over the 20 years of study period, two distinct trends were observed. The real prices remained flat for the first 10 years and increased substantially in the second 10 years. Overall, the real price index linearly trended upwards. Employing the real price index and the external variables, a series of equations was developed as the foundation of an econometric model. The econometric model utilizes the following equation: New Permits (a measure of supply) and Tahoe Skier Visits (a measure of demand), to forecast future supply and demand.

Department dc:contributor.department

Massachusetts Institute of Technology. Center for Real Estate

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2008

Author dc:creator

• Lee, Sean, S.M. Massachusetts Institute of Technology

Advisor dc:contributor.advisor

• William C. Wheaton.

• Urban Studies and Planning.
• Center for Real Estate.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/58654

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/58654