Which Way is Up? Orientation and Residential Property Values

Abstract

Builders have long been cognizant of the importance of the siting of a house on a lot, whether to shelter from prevailing weather, allow better access to natural light, gain a scenic view, or more recently for optimal capture of solar energy. Using 2016–2017 sales data for the County of San Diego, we examine the market valuation of house orientation. San Diego provides a good research area as the topography does not lend itself to a grid-like pattern for the street system. Orientation is divided into eight directions (south, southeast, east, . . .) and hedonic price equations are estimated. In addition, the analysis includes proximity to a cul-de-sac and street intersection as explanatory variables. The results suggest that house orientation is a significant factor in determining house valuation. Houses oriented directly on an east-west axis command a premium over houses oriented on a north-south axis. After correcting for spatial autocorrelation, neither cul-de-sac nor intersection locations are significant factors in determining housing prices. Moreover, a robustness check using a small sample of 241 transactions provides inclusive results regarding a premium for solar panel installation.

Factors affecting residential land prices A review of the literature

“…In the study by (Ma & Narwold, 2019) they suggested that house orientation is a significant factor in determining house valuation. Similarly, (Rashid et al, 2018) studied the orientation of the building found it to be one of the locational factors that affect residential property value.…”