Valuing Proximity to Lake and Ski Recreation Amenities : Hedonic Prices for Vacation Rental Houses at Deep Creek Lake, Maryland

This paper estimates hedonic price models for a sample of 610 vacation rental houses located in the vicinity of a lake and four-season ski-golf resort. Hedonic semilogarithmic regression models are estimated for peak summer and peak winter rentals for 2008. The regression estimates for weekly rental prices are conditioned on explanatory variables for house size, house quality, and locational features including lakefront proximity and ski-slope access. Subsample regressions are reported for properties managed by three real estate agencies and for a sample of vacation-rental-by-owner properties. The regression estimates are used to obtain percentage effects and monetary values for each explanatory variable. The estimates provide evidence that access to recreation opportunities is reflected importantly in rental offers. Evaluated at the sample means, lakefront locations have a rental premium of about $1200 per week (plus-44%) and the premium for ski-slope locations is $500-600 per week (plus-23 to 27%). In addition to structural characteristics, percentage and monetary values are reported for split-lakefronts, ski-road access, private docks, and private swimming pools. The paper also reports hedonic models corrected for spatial correlation. Although there is some evidence of positive spatial correlation in the OLS residuals, estimation by maximum likelihood does not result in substantial changes in most coefficient magnitudes or standard error estimates