Sinkholes and Residential Property Prices: Presence, Proximity, and Density

Randy E. Dumm, G. Stacy Sirmans and Greg T. Smersh

Journal of Real Estate Research, 2018, vol. 40, issue 1, 41-68

Abstract: Spatial amenities, along with structural characteristics, affect residential property values. Although the bundle of structural characteristics is typically the primary value determinant, studies have shown that externalities and risk factors can adversely affect property values. We use residential property sales data from 2010 to 2014 and sinkhole data from “sinkhole alley” in Florida to examine the effect of sinkhole presence, proximity, and density on the sale price of residential real estate. Using a spatial error regression model, the results show that sinkhole proximity and sinkhole exposure (density) create a negative externality and both have a significant negative effect on house prices. While the results show a negative effect of having a sinkhole on the property, those results are not statistically significant.

Date: 2018
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DOI: 10.1080/10835547.2018.12091491

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