The Impact of Distant Hurricane on Local Housing Markets

Lu Fang (), Lingxiao Li () and Abdullah Yavas ()
Additional contact information
Lu Fang: Florida International University
Lingxiao Li: California State University, Fullerton
Abdullah Yavas: University of Wisconsin – Madison

The Journal of Real Estate Finance and Economics, 2023, vol. 66, issue 2, No 5, 327-372

Abstract: Abstract 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).

Keywords: Hurricanes; Flood risk; House Price; Perception (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s11146-021-09843-3

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