Real estate researchers have suggested that the law of diminishing marginal utility applies not only to consumption of property but to the characteristics of the properties consumed as well. Employs a unique data set to empirically model the functional form of the price effects of marginal additions to lot size and view. Shows that the relationships between lot price, size and view are non‐linear, and that marginal price effects diminish as lot size and view quality increase. The results imply that traditional valuation models allow only for the existence of view, rather than the quality of view, and are too simplistic and imprecise. Appraisers should be cognizant of this implication, and devise valuation techniques which allow them to consider differences in the quality of view from property to property.
Wolverton, M.L. (1997), "Empirical study of the relationship between residential lot price, size and view", Journal of Property Valuation and Investment, Vol. 15 No. 1, pp. 48-57. https://doi.org/10.1108/14635789710163801
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