The Value of Proximity to a Vacation Home Rental in a Resort Community

Abstract

Based upon a hedonic regression analysis of home sales in the City of South Lake Tahoe (CA), a vacation home rental (VHR) sells for more than a similar non-VHR. In addition, the presence of VHRs within a quarter-mile radius of a home sale also raises its value. However, the overall effect on the value of all home sale values from the presence of VHRs in South Lake Tahoe is negative. VHRs benefit owners and neighbors near them, but overall reduce the city’s residential property values. These findings offer a logical basis for the heated discussions often observed over planning activities that restrict the presence of VHRs and/or attempt to mitigate their neighborhood effects. The paper concludes with implications for planning policy directed at VHRs.