How much is a view worth? This question often comes up when pricing real estate. While not all views are equal, and the topic can be subjective—is an unobstructed, expansive urban view preferable to a park view? What about a water view?—there is generally a known hierarchy depending on a property’s location. For example, green space is one of the most desired views in a city as dense and urban as New York City. While water views of the East and Hudson River on each side of the island can command a premium, Central Park views reign supreme. On the other hand, on the West Coast, which is largely dominated by greenspace, water views tend to be the preference.

In this report we sought to quantify view premiums with a focus on water views in Los Angeles. The city is a good case study on quantifying view premiums as it has a variety of architectural and geographic features such as a semi-urban cityscape, greenspace (Santa Monica mountains and a plethora of parks), and ocean views. In our analysis, we focused specifically on water vs non-water view premiums in Marina del Rey, a coastal community known for its eponymous harbor, laid back lifestyle, and prevalence of boating and water recreation. Marina del Rey provides a good case study as the neighborhood generally attracts those wishing to live near the water—and therefore are expected to have a preference for such views—and has larger housing complexes from which to analyze compared to neighboring coastal communities such as Venice Beach, Santa Monica, and Malibu.

In our analysis we selected Azzurra, a 450-unit, 19-story condominium building built in 2003. The chart below illustrates each unit that has closed between January 2022 and January 2023. The black circles represent non-ocean view units while the blue triangles represent ocean view units. The dashed lines represent the trendline—the relationship between size and sold price per square foot—for each unit type (view or non-view). As illustrated, the trendline for the ocean view units is greater than the trendline for non-ocean view units suggesting that the former command a premium over non- view units of the same size.

While this highlights the existence and dynamic of an ocean view premium in Los Angeles, we also sought to quantify what that premium was via regression analysis. While there are various ways to analyze the data, we used a linear regression to model the relationship between the price per square foot of a unit and its view. We separated the data set into view and non-view and ran individual regressions for each. Our findings suggest that for a standard, 1,500 square foot unit an ocean view unit would command a 27% premium over the same size unit without an ocean view. This relationship is visualized by the two orange circles on the chart. The darker circle represents the price per square foot output of the model given an ocean view designation and unit size of 1,500 square feet. The lighter, transparent circle represents the same, but for a non-view unit.

In addition to visualizing the material impact of views on pricing, the trendline on the chart brings up another interesting dynamic: price per square foot increases with size for view units and decreases with size for non-view units. Returning to our two regression models, we sought to quantify this trend by looking at the price per square foot output for a 1,000 square foot versus a 2,000 square foot unit with and without a view. We found that for non-view units, price per square foot goes down 7% whereas for view units it increases by 39%. This brings up an important tenant as it relates to design development: larger unit types and floor plans should be concentrated on floors with the best views—typically the highest floors in tower residences.

While views are one of the most important factors in determining price, they are not the only. In future reports we will look into the relationship between various other factors and seek to quantify their impact on pricing. Furthermore, if you’re interested in custom research to determine view premiums for your building, please do not hesitate to reach out.

All information is from sources deemed reliable but no guarantee is made as to its accuracy. All material presented herein is intended for informational purposes only and is subject to human errors, omissions, changes or withdrawals without notice.