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Building Codes and Land Values in High Hazard Areas

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  • Carolyn A. Dehring

Abstract

Vacant land prices on Florida’s barrier islands are examined under four coastal building regulatory regimes. A hedonic pricing model features 1,745 vacant residential land sales from five barrier islands in Lee County between 1980 and 1993. We find that land values decrease in response to the county’s participation in the National Flood Insurance Program, the establishment of a Coastal Building Zone, and following the reestablishment of the Coastal Construction Control Line. The findings suggest that benefits of safety from increased building standards are outweighed by the additional costs of compliance brought about by the code changes.

Suggested Citation

  • Carolyn A. Dehring, 2006. "Building Codes and Land Values in High Hazard Areas," Land Economics, University of Wisconsin Press, vol. 82(4), pages 513-528.
    • Handle: RePEc:uwp:landec:v:82:y:2006:i:4:p:513-528
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    References listed on IDEAS

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    1. Geoffrey K. Turnbull, 2002. "Land Development under the Threat of Taking," Southern Economic Journal, John Wiley & Sons, vol. 69(2), pages 290-308, October.
    2. Parsons, George R., 1992. "The effect of coastal land use restrictions on housing prices: A repeat sale analysis," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 25-37, January.
    3. James Chivers & Nicholas E. Flores, 2002. "Market Failure in Information: The National Flood Insurance Program," Land Economics, University of Wisconsin Press, vol. 78(4), pages 515-521.
    4. Riddiough, Timothy J., 1997. "The Economic Consequences of Regulatory Taking Risk on Land Value and Development Activity," Journal of Urban Economics, Elsevier, vol. 41(1), pages 56-77, January.
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    6. Sharon M. Oster & John M. Quigley, 1977. "Regulatory Barriers to the Diffusion of Innovation: Some Evidence from Building Codes," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 361-377, Autumn.
    7. Joseph J. Cordes & Anthony M. J. Yezer, 1998. "In Harm's Way: Does Federal Spending on Beach Enhancement and Protection Induce Excessive Development in Coastal Areas?," Land Economics, University of Wisconsin Press, vol. 74(1), pages 128-145.
    8. W. Patrick Beaton, 1991. "The Impact of Regional Land-Use Controls on Property Values: The Case of the New Jersey Pinelands," Land Economics, University of Wisconsin Press, vol. 67(2), pages 172-194.
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    Citations

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    Cited by:

    1. Carolyn A. Dehring & Craig A. Depken & Michael R. Ward, 2007. "The Impact Of Stadium Announcements On Residential Property Values: Evidence From A Natural Experiment In Dallas‐Fort Worth," Contemporary Economic Policy, Western Economic Association International, vol. 25(4), pages 627-638, October.
    2. Chamblee, John F. & Dehring, Carolyn A. & Depken, Craig A., 2009. "Watershed development restrictions and land prices: Empirical evidence from southern Appalachia," Regional Science and Urban Economics, Elsevier, vol. 39(3), pages 287-296, May.
    3. Carolyn A. Dehring & Martin Halek, 2013. "Coastal Building Codes and Hurricane Damage," Land Economics, University of Wisconsin Press, vol. 89(4), pages 597-613.
    4. Daniel R. Petrolia & Craig E. Landry & Keith H. Coble, 2013. "Risk Preferences, Risk Perceptions, and Flood Insurance," Land Economics, University of Wisconsin Press, vol. 89(2), pages 227-245.
    5. Randy Dumm & G. Sirmans & Greg Smersh, 2011. "The Capitalization of Building Codes in House Prices," The Journal of Real Estate Finance and Economics, Springer, vol. 42(1), pages 30-50, January.
    6. Dean Gatzlaff & Kathleen McCullough & Lorilee Medders & Charles M. Nyce, 2018. "The Impact of Hurricane Mitigation Features and Inspection Information on House Prices," The Journal of Real Estate Finance and Economics, Springer, vol. 57(4), pages 566-591, November.
    7. Wang, Chunhua, 2014. "Regulating land development in a natural disaster-prone area: The roles of building codes," Resource and Energy Economics, Elsevier, vol. 36(1), pages 209-228.
    8. Russell McKenzie & John Levendis, 2010. "Flood Hazards and Urban Housing Markets: The Effects of Katrina on New Orleans," The Journal of Real Estate Finance and Economics, Springer, vol. 40(1), pages 62-76, January.
    9. Parton, Lee C. & Dundas, Steven J., 2020. "Fall in the sea, eventually? A green paradox in climate adaptation for coastal housing markets," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).

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    More about this item

    JEL classification:

    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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