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Environmental Determinants of Housing Prices: The Impact of Flood Zone Status

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Author Info

  • David M. Harrison

    ()
    (University of Vermont, Berlington, VT)

  • Greg T. Smersh

    ()
    (University of South Florida, St. Petersburg, FL)

  • Arthur L. Schwartz, Jr

    ()
    (University of South Florida, St. Petersburg, FL)

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    Abstract

    This study examines the valuation of homes located within 100-year flood plains. Utilizing a database of 29,887 property transactions in Alachua County, Florida, the results of this investigation suggest that comparable characteristic homes located within a flood zone sell, on average, for less than homes located outside flood zones. Interestingly, the price differential is less than the present value of future flood insurance premiums. In addition, the price differential is shown to have increased since passage of the National Flood Insurance Reform Act of 1994. Finally, it appears that property tax assessors have slightly over-assessed properties located in flood zones relative to those in other areas. The large database and the lengthy period of analysis (1980–1997) are much broader than that of previous research efforts.

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    File URL: http://aux.zicklin.baruch.cuny.edu/jrer/papers/pdf/past/vol21n0102/02.3_20.pdf
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    Bibliographic Info

    Article provided by American Real Estate Society in its journal Journal of Real Estate Research.

    Volume (Year): 21 (2001)
    Issue (Month): 1/2 ()
    Pages: 3-20

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    Handle: RePEc:jre:issued:v:21:n:1/2:2001:p:3-20

    Contact details of provider:
    Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
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    Web page: http://www.aresnet.org/

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    Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
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    Web: http://aux.zicklin.baruch.cuny.edu/jrer/about/get.htm

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Shilling, James D. & Sirmans, C. F. & Benjamin, John D., 1989. "Flood insurance, wealth redistribution, and urban property values," Journal of Urban Economics, Elsevier, vol. 26(1), pages 43-53, July.
    2. Terrance R. Skantz & Thomas H. Strickland, 1987. "House Prices and a Flood Event: An Empirical Investigation of Market Efficiency," Journal of Real Estate Research, American Real Estate Society, vol. 2(2), pages 75-83.
    3. Gatzlaff Dean H. & Ling David C., 1994. "Measuring Changes in Local House Prices: An Empirical Investigation of Alternative Methodologies," Journal of Urban Economics, Elsevier, vol. 35(2), pages 221-244, March.
    4. Michel Glower & Donald R. Haurin & Patric H. Hendershott, 1998. "Selling Time and Selling Price: The Influence of Seller Motivation," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 26(4), pages 719-740.
    5. Benson, Earl D, et al, 1998. "Pricing Residential Amenities: The Value of a View," The Journal of Real Estate Finance and Economics, Springer, vol. 16(1), pages 55-73, January.
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    Citations

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    Cited by:
    1. Grislain-Letrémy, Céline & Villeneuve, Bertrand, 2011. "Natural and Industrial Disasters : Land Use and Insurance," Economics Papers from University Paris Dauphine 123456789/7845, Paris Dauphine University.
    2. Luechinger, Simon & Raschky, Paul A., 2009. "Valuing flood disasters using the life satisfaction approach," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 620-633, April.
    3. Vanessa E. Daniel & Raymond J.G.M. Florax & Piet Rietveld, 2007. "Flooding Risk And Housing Values: An Economic Assessment Of Environmental Hazard," Working Papers 07-02, Purdue University, College of Agriculture, Department of Agricultural Economics.
    4. Bradley Ewing & Jamie Kruse & Yongsheng Wang, 2007. "Local housing price index analysis in wind-disaster-prone areas," Natural Hazards, International Society for the Prevention and Mitigation of Natural Hazards, vol. 40(2), pages 463-483, February.
    5. Barker, David, 2003. "Terrorism insurance subsidies and social welfare," Journal of Urban Economics, Elsevier, vol. 54(2), pages 328-338, September.
    6. John Whitehead & Adam Rose, 2009. "Estimating environmental benefits of natural hazard mitigation with data transfer: results from a benefit-cost analysis of Federal Emergency Management Agency hazard mitigation grants," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 14(7), pages 655-676, October.
    7. Atreya, Ajita & Ferreira, Susana, 2012. "Spatial Variation in Flood Risk Perception: A Spatial Econometric Approach," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124863, Agricultural and Applied Economics Association.
    8. Bin, Okmyung & Landry, Craig E., 2013. "Changes in implicit flood risk premiums: Empirical evidence from the housing market," Journal of Environmental Economics and Management, Elsevier, vol. 65(3), pages 361-376.

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