The Impact of Distant Hurricane on Local Housing Markets.

Fang, Lu; Li, Lingxiao; Yavas, Abdullah

This study investigates whether the local housing markets can be affected by the occurrence of a large-scale but distant hurricane without direct impact. Using a dataset of residential transactions in Miami-Dade County, FL between 2005 and 2014, we find that the impact of a property's flood risk exposure on its value varies over time, with a price penalty of 4% in hurricane striking period. By contrast, within a quiet hurricane period, properties within high flood hazard zones demand a price premium ranging roughly from 4% to 6%, which may represent the price impact of water-related amenities. The premium declined significantly upon Hurricane Sandy. Several possible explanations are provided and tested to explain the main findings. Our findings indicate that the occurrence of a disastrous hurricane which impacted faraway regions also raised local home buyers' perception of flood risk, but for a short period of time (one quarter).

MIAMI-Dade County (Fla.); HURRICANE Sandy, 2012; HOUSING market; HURRICANES; FLOOD risk; RISK perception

Journal of Real Estate Finance & Economics, 2023, Vol 66, Issue 2, p327

0895-5638

Academic Journal

10.1007/s11146-021-09843-3