IDEAS home Printed from https://ideas.repec.org/a/eee/regeco/v60y2016icp12-19.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0166046216300540
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kelejian, Harry H & Prucha, Ingmar R, 1999. "A Generalized Moments Estimator for the Autoregressive Parameter in a Spatial Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(2), pages 509-533, May.
    2. Zhang, Lei & Leonard, Tammy, 2014. "Neighborhood impact of foreclosure: A quantile regression approach," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 133-143.
    3. Okmyung Bin & Jamie Brown Kruse & Craig E. Landry, 2008. "Flood Hazards, Insurance Rates, and Amenities: Evidence From the Coastal Housing Market," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(1), pages 63-82, March.
    4. Liao, Wen-Chi & Wang, Xizhu, 2012. "Hedonic house prices and spatial quantile regression," Journal of Housing Economics, Elsevier, vol. 21(1), pages 16-27.
    5. Ajita Atreya & Susana Ferreira & Warren Kriesel, 2013. "Forgetting the Flood? An Analysis of the Flood Risk Discount over Time," Land Economics, University of Wisconsin Press, vol. 89(4), pages 577-596.
    6. Stephen Mak & Lennon Choy & Winky Ho, 2010. "Quantile Regression Estimates of Hong Kong Real Estate Prices," Urban Studies, Urban Studies Journal Limited, vol. 47(11), pages 2461-2472, October.
    7. Paul Frijters & Benno Torgler & Darshana Rajapaksa & Clevo Wilson & Shunsuke Managi & Vincent Hoang & Boon Lee, 2016. "Flood Risk Information, Actual Floods and Property Values: A Quasi-Experimental Analysis," The Economic Record, The Economic Society of Australia, vol. 92, pages 52-67, June.
    8. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    9. McMillen, Daniel, 2015. "Conditionally parametric quantile regression for spatial data: An analysis of land values in early nineteenth century Chicago," Regional Science and Urban Economics, Elsevier, vol. 55(C), pages 28-38.
    10. Don N. MacDonald & James C. Murdoch & Harry L. White, 1987. "Uncertain Hazards, Insurance, and Consumer Choice: Evidence from Housing Markets," Land Economics, University of Wisconsin Press, vol. 63(4), pages 361-371.
    11. McMillen, Daniel P., 2008. "Changes in the distribution of house prices over time: Structural characteristics, neighborhood, or coefficients?," Journal of Urban Economics, Elsevier, vol. 64(3), pages 573-589, November.
    12. Tae-Hwan Kim & Christophe Muller, 2004. "Two-stage quantile regression when the first stage is based on quantile regression," Econometrics Journal, Royal Economic Society, vol. 7(1), pages 218-231, June.
    13. David M. Harrison & Greg T. Smersh & Arthur L. Schwartz, Jr, 2001. "Environmental Determinants of Housing Prices: The Impact of Flood Zone Status," Journal of Real Estate Research, American Real Estate Society, vol. 21(1/2), pages 3-20.
    14. Joachim Zietz & Emily Zietz & G. Sirmans, 2008. "Determinants of House Prices: A Quantile Regression Approach," The Journal of Real Estate Finance and Economics, Springer, vol. 37(4), pages 317-333, November.
    15. Çağlayan Ebru & Arikan Eban, 2011. "Determinants of house prices in Istanbul: a quantile regression approach," Quality & Quantity: International Journal of Methodology, Springer, vol. 45(2), pages 305-317, February.
    16. N. Edward Coulson & Daniel P. McMillen, 2007. "The Dynamics of Intraurban Quantile House Price Indexes," Urban Studies, Urban Studies Journal Limited, vol. 44(8), pages 1517-1537, July.
    17. Won Kim, Chong & Phipps, Tim T. & Anselin, Luc, 2003. "Measuring the benefits of air quality improvement: a spatial hedonic approach," Journal of Environmental Economics and Management, Elsevier, vol. 45(1), pages 24-39, January.
    18. Basu, Sabyasachi & Thibodeau, Thomas G, 1998. "Analysis of Spatial Autocorrelation in House Prices," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 61-85, July.
    19. 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.
    20. Todd H. Kuethe & Roman Keeney, 2012. "Environmental Externalities and Residential Property Values: Externalized Costs along the House Price Distribution," Land Economics, University of Wisconsin Press, vol. 88(2), pages 241-250.
    21. Okmyung Biny & Stephen Polasky, 2004. "Effects of Flood Hazards on Property Values: Evidence Before and After Hurricane Floyd," Land Economics, University of Wisconsin Press, vol. 80(4).
    22. James P. LeSage & R. Kelley Pace & Nina Lam & Richard Campanella & Xingjian Liu, 2011. "New Orleans business recovery in the aftermath of Hurricane Katrina," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 174(4), pages 1007-1027, October.
    23. Deng, Yongheng & McMillen, Daniel P. & Sing, Tien Foo, 2012. "Private residential price indices in Singapore: A matching approach," Regional Science and Urban Economics, Elsevier, vol. 42(3), pages 485-494.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:kap:jrefec:v:58:y:2019:i:4:d:10.1007_s11146-018-9664-1 is not listed on IDEAS
    2. repec:eee:jhouse:v:41:y:2018:i:c:p:72-84 is not listed on IDEAS
    3. Indaco, Agustín & Ortega, Francesc & Taspinar, Süleyman, 2018. "The Effects of Flood Insurance on Housing Markets," IZA Discussion Papers 11810, Institute of Labor Economics (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. Hu, Xi & Pant, Raghav & Hall, Jim W. & Surminski, Swenja & Huang, Jiashun, 2019. "Multi-scale assessment of the economic impacts of flooding: evidence from firm to macro-level analysis in the Chinese manufacturing sector," LSE Research Online Documents on Economics 100534, London School of Economics and Political Science, LSE Library.
    6. repec:gam:jsusta:v:10:y:2018:i:7:p:2254-:d:155400 is not listed on IDEAS
    7. repec:gam:jsusta:v:11:y:2019:i:7:p:1933-:d:218995 is not listed on IDEAS
    8. 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 of Labor Economics (IZA).
    9. Zhang, Lei & Yi, Yimin, 2017. "Quantile house price indices in Beijing," Regional Science and Urban Economics, Elsevier, vol. 63(C), pages 85-96.
    10. 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.
    11. repec:eee:juecon:v:106:y:2018:i:c:p:81-100 is not listed on IDEAS
    12. 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.
    13. repec:eee:regeco:v:68:y:2018:i:c:p:172-190 is not listed on IDEAS
    14. repec:eee:regeco:v:75:y:2019:i:c:p:187-209 is not listed on IDEAS
    15. 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:60:y:2016:i:c:p:12-19. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/regec .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.