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Graduated Flood Risks and Property Prices in Galveston County

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  • Ajita Atreya
  • Jeffrey Czajkowski

Abstract

Our hedonic property analysis approach in Galveston County, Texas aims at estimating the impacts of flood risks and water‐related amenities in a more systematic way. First, we interact distance to the nearest coastline and flood risk in order to account for these impacts acting together on housing sales prices in our coastal community. Second, we use more granular flood risk measure in the analysis compared to the existing literature. Results show that the hedonic price effect is dependent upon the distance to the nearest coastline, and as expected the distance effect varies by flood risk type. We find that in this coastal housing market properties located in the highest risk flood area, for up to nearly a quarter mile from the nearest coastline, actually command a price premium. A recent movement toward risk‐based flood insurance premiums in the United States was deeply opposed by the real estate sector for fear of causing property values to steeply decline. This analysis sheds some further light on this depressed property value assertion highlighting its sensitivity to distance to the water.

Suggested Citation

  • Ajita Atreya & Jeffrey Czajkowski, 2019. "Graduated Flood Risks and Property Prices in Galveston County," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 47(3), pages 807-844, September.
    • Handle: RePEc:bla:reesec:v:47:y:2019:i:3:p:807-844
    DOI: 10.1111/1540-6229.12163
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    Cited by:

    1. Justin Contat & Carrie Hopkins & Luis Mejia & Matthew Suandi, 2024. "When climate meets real estate: A survey of the literature," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 52(3), pages 618-659, May.
    2. Ivan Petkov, 2022. "Weather Shocks, Population, and Housing Prices: the Role of Expectation Revisions," Economics of Disasters and Climate Change, Springer, vol. 6(3), pages 495-540, November.
    3. Bernstein, Asaf & Billings, Stephen B. & Gustafson, Matthew T. & Lewis, Ryan, 2022. "Partisan residential sorting on climate change risk," Journal of Financial Economics, Elsevier, vol. 146(3), pages 989-1015.
    4. Małgorzata Dudzińska & Barbara Prus & Radosław Cellmer & Stanisław Bacior & Katarzyna Kocur-Bera & Anna Klimach & Agnieszka Trystuła, 2020. "The Impact of Flood Risk on the Activity of the Residential Land Market in a Polish Cultural Heritage Town," Sustainability, MDPI, vol. 12(23), pages 1-18, December.
    5. Justin Tyndall, 2023. "Sea Level Rise and Home Prices: Evidence from Long Island," The Journal of Real Estate Finance and Economics, Springer, vol. 67(4), pages 579-605, November.
    6. Lu Fang & Lingxiao Li & Abdullah Yavas, 2023. "The Impact of Distant Hurricane on Local Housing Markets," The Journal of Real Estate Finance and Economics, Springer, vol. 66(2), pages 327-372, February.
    7. Pollack, Adam B. & Kaufmann, Robert K., 2022. "Increasing storm risk, structural defense, and house prices in the Florida Keys," Ecological Economics, Elsevier, vol. 194(C).
    8. Nori Tarui & Seth Urbanski & Quang Loc Lam & Makena Coffman & Conrad Newfield, 2023. "Sea level rise risk interactions with coastal property values: a case study of O‘ahu, Hawai‘i," Climatic Change, Springer, vol. 176(9), pages 1-21, September.
    9. Cohen, Jeffrey P. & Barr, Jason & Kim, Eon, 2021. "Storm surges, informational shocks, and the price of urban real estate: An application to the case of Hurricane Sandy," Regional Science and Urban Economics, Elsevier, vol. 90(C).
    10. repec:fip:fedpwp:96170 is not listed on IDEAS
    11. Siddhartha Biswas & Mallick Hossain & David Zink, 2023. "California Wildfires, Property Damage, and Mortgage Repayment," Working Papers 23-05, Federal Reserve Bank of Philadelphia.
    12. Fang Wei & Lvwang Zhao, 2022. "The Effect of Flood Risk on Residential Land Prices," Land, MDPI, vol. 11(10), pages 1-18, September.
    13. Jose J. Canals-Cerda & Raluca Roman, 2021. "Climate Change and Consumer Finance: A Very Brief Literature Review," Consumer Finance Institute discussion papers 21-04, Federal Reserve Bank of Philadelphia.

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