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The Effect of Racial Composition on Neighborhood Housing Prices: Evidence from Hurricane Katrina-Induced Migration

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  • Daepp, Madeleine I.G.
  • Bunten, Devin Michelle
  • Hsu, Joanne W.

Abstract

Urban housing markets are characterized by racial sorting, but equilibrium prices respond to marginal buyers and thus may mask underlying preferences for segregation. Large migration shocks can make visible these otherwise infra-marginal preferences. We study the effects of Hurricane Katrina-induced displacement on housing markets in receiving neighborhoods in Texas, where 1 in 5 New Orleanians relocated. Using an event study design, we find that the relocation of 100 additional Katrina survivors to a receiving ZIP code is associated with a 2.2% decline in relative house prices five years after the storm. This effect is driven by responses to movers from predominantly Black origin blocks. We argue that our findings are best explained by a preference for segregation on the part of incumbent White residents. In this case, racial stratification in the effect of a disaster is followed by racial stratification in economic responses.

Suggested Citation

  • Daepp, Madeleine I.G. & Bunten, Devin Michelle & Hsu, Joanne W., 2023. "The Effect of Racial Composition on Neighborhood Housing Prices: Evidence from Hurricane Katrina-Induced Migration," Journal of Urban Economics, Elsevier, vol. 134(C).
    • Handle: RePEc:eee:juecon:v:134:y:2023:i:c:s0094119022000912
    DOI: 10.1016/j.jue.2022.103515
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    More about this item

    Keywords

    Residential mobility; Disaster-induced displacement; Hurricane Katrina; Housing prices; Regional migration; Segregation;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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