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Flood hazards impact on neighborhood house prices: A spatial quantile regression analysis

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  • Zhang, Lei

Abstract

This study examines whether being located within a 100-year floodplain has an impact on the price of residential single-family house sales using house sales data in the Fargo-Moorhead Metropolitan Statistical Area between 2000 and 2013. A spatial quantile regression is applied to investigate the flood hazards impact on conditional higher- vs lower- priced homes, while accounting for spatial autocorrelation. The findings show that the location within a floodplain reduces property value. Furthermore, the negative impact of flood hazards on property values are stronger among lower-priced homes, and weaker among higher-priced homes. In addition, the study examines if a major flood in 2009 had an impact on the home buyers' perception about flood risk. The results show that about a year after the major flood, home buyers responded the most, however, the effect quickly diminished after 2010. Across quantiles, the 2009 flood had more effect on lower-priced than higher-priced homes.

Suggested Citation

  • Zhang, Lei, 2016. "Flood hazards impact on neighborhood house prices: A spatial quantile regression analysis," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 12-19.
    • Handle: RePEc:eee:regeco:v:60:y:2016:i:c:p:12-19
    DOI: 10.1016/j.regsciurbeco.2016.06.005
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    1. repec:eee:jhouse:v:41:y:2018:i:c:p:72-84 is not listed on IDEAS
    2. Ortega, Francesc & Taspinar, Süleyman, 2016. "Rising Sea Levels and Sinking Property Values: The Effects of Hurricane Sandy on New York's Housing Market," IZA Discussion Papers 10374, Institute for the Study of Labor (IZA).
    3. Indaco, Agustín & Ortega, Francesc & Taspinar, Süleyman, 2018. "The Effects of Flood Insurance on Housing Markets," IZA Discussion Papers 11810, Institute for the Study of Labor (IZA).
    4. McMillen, Daniel & Shimizu, Chihiro, 2017. "Decompositions of Spatially Varying Quantile Distribution Estimates: The Rise and Fall of Tokyo House Prices," HIT-REFINED Working Paper Series 74, Institute of Economic Research, Hitotsubashi University.
    5. Zhang, Lei & Yi, Yimin, 2017. "Quantile house price indices in Beijing," Regional Science and Urban Economics, Elsevier, vol. 63(C), pages 85-96.
    6. Gabor Bekes & Aron Horvath & Zoltan Sapi, 2016. "Flood risk and housing prices: evidence from Hungary," IEHAS Discussion Papers 1620, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    7. repec:eee:juecon:v:106:y:2018:i:c:p:81-100 is not listed on IDEAS
    8. Livy, Mitchell R., 2017. "Catastrophe Capitalization: Estimating Changes in Perceptions of Extreme Natural Events over Time," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258251, Agricultural and Applied Economics Association.
    9. repec:eee:regeco:v:68:y:2018:i:c:p:172-190 is not listed on IDEAS
    10. repec:gam:jsusta:v:10:y:2018:i:7:p:2254-:d:155400 is not listed on IDEAS
    11. repec:gam:jsusta:v:10:y:2018:i:4:p:975-:d:138217 is not listed on IDEAS

    More about this item

    Keywords

    Hedonic model; Flood hazards; Spatial quantile regression;

    JEL classification:

    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables

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