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Rising sea levels and sinking property values: Hurricane Sandy and New York’s housing market

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  • Ortega, Francesc
  • Taṣpınar, Süleyman

Abstract

This paper analyzes the effects of hurricane Sandy on the New York City housing market using a large parcel-level dataset that contains all housing sales for 2003–2017. The dataset also contains geo-coded FEMA data on which building structures were damaged by the hurricane and to what degree. Our estimates provide robust evidence of a persistent negative impact on flood zone housing values. We show the gradual emergence of a price penalty among flood zone properties that were not damaged by Sandy, reaching 8% in year 2017 and showing no signs of recovery. In contrast, damaged properties suffered a large immediate drop in value following the storm (17–22%), followed by a partial recovery and convergence toward a similar penalty as non-damaged properties. The partial recovery in the prices of damaged properties likely reflects their gradual restoration. However, the persistent price reduction affecting all flood-zone properties is more consistent with a learning mechanism. Hurricane Sandy may have increased the perceived risk of large-scale flooding episodes in that area.

Suggested Citation

  • Ortega, Francesc & Taṣpınar, Süleyman, 2018. "Rising sea levels and sinking property values: Hurricane Sandy and New York’s housing market," Journal of Urban Economics, Elsevier, vol. 106(C), pages 81-100.
  • Handle: RePEc:eee:juecon:v:106:y:2018:i:c:p:81-100
    DOI: 10.1016/j.jue.2018.06.005
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    1. repec:eee:ecolet:v:177:y:2019:i:c:p:105-108 is not listed on IDEAS
    2. repec:eee:regeco:v:75:y:2019:i:c:p:187-209 is not listed on IDEAS
    3. Mohammad Reza Farzanegan & Mehdi Feizi & Hassan F. Gholipour, 2019. "Drought and Property Prices: Empirical Evidence from Iran," MAGKS Papers on Economics 201916, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    4. Indaco, Agustín & Ortega, Francesc & Taspinar, Süleyman, 2018. "The Effects of Flood Insurance on Housing Markets," IZA Discussion Papers 11810, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    Climate change; Real estate; Cities; Hurricane Sandy;

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets

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