House Prices and a Flood Event: An Empirical Investigation of Market Efficiency
AbstractIn this study, house-price reactions to a first-time disastrous flood are investigated. Conventional wisdom predicted prices would decline and later regain lost value as the market forgot the flood. In fact, sample home prices do not fall immediately after the flood and do not later rise. On the other hand, when flood insurance premiums rise dramatically approximately one year after the flood, these higher rates are capitalized into home values and prices do decline. The findings are consistent with rational and efficient markets.
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Bibliographic InfoArticle provided by American Real Estate Society in its journal Journal of Real Estate Research.
Volume (Year): 2 (1987)
Issue (Month): 2 ()
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
Web page: http://www.aresnet.org/
Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
Find related papers by JEL classification:
- L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
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07-02, Purdue University, College of Agriculture, Department of Agricultural Economics.
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