Fires in the Built Environment and Residential Market Demand

Using nationwide data on multifamily residential transactions in South Korea, we investigate how large-scale fires in the built environment affect housing markets. We make use of geospatial data and apply a difference-in-differences research design to show that fires in an apartment complex cause an approximately 9% decline in housing prices over a one- to two-month period. In contrast, fires that occur slightly farther away or in nonresidential buildings have no significant effect. Text mining analysis further suggests that greater media coverage—often associated with fires in nonresidential structures—does not necessarily result in larger price declines.