Climate Risk and Beliefs in New York Floodplains

Gibson, Matthew; Mullins, Jamie T.

doi:10.1086/710240

Cited by 68 publications

(43 citation statements)

References 71 publications

(68 reference statements)

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“…In analysis 2, the values of properties that had not flooded previously but were designated as flood-risk zones declined. This finding is consistent with that of Gibson et al (2019). The values of the properties that were inundated by previous floods and were located in the designated flood risk zones continuously declined, whereas the values of properties that were inundated by previous floods but were not located in the designated flood zones displayed a slower decline after the disclosure of flood risk information, although the difference was not statistically significant.…”

Section: Discussionsupporting

confidence: 88%

“…Indaco et al (2019) reported that the prices of properties whose flood risk was downgraded in the updated FEMA flood risk maps increased. Gibson et al (2019) showed that properties that did not flood during Hurricane Sandy in 2012 but included in the new floodplain maps suffered price drops after the release of the new maps. These studies have confirmed that the disclosure of new flood risk information affects real estate property values.…”

Section: Introductionmentioning

confidence: 99%

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How Does Residential Property Market React to Flood Risk in Flood-Prone Regions? A Case Study in Nagoya City

Inoue

Hatori

2021

Front. Water

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To quantify the flood risk awareness of real estate market participants and residents, previous studies analyzed the effect of flood risks on residential property values. However, most studies focused on the impact of recent flood events and the publication of new flood risk information; the behavior in flood-prone regions in which repeated damages occurred and lessons learned consequently has not been the focus of analysis. Moreover, there is a growing national concern in Japan about an increase in future flood risks due to climate change, although their effect on property values has not been discussed. In this study, we analyzed residential property values in Nagoya City (Aichi Prefecture, Japan), a megacity that has experienced significant flood damage in major historical and recent floods. The main objective of this study is to determine the effects of past and recent flood experiences and the increasing concerns about flood risks on recent residential property values. The results revealed that historical flood damage had the largest impact on residential property values in Nagoya City, and devaluation increased due to growing concerns about natural disasters in Japan. The disclosure of flood risk information also had an impact on property values, increasing devaluation after disclosure. On the contrary, the occurrence of recent floods did not have an impact on property values, suggesting that flood risk awareness had already been strong in the target area. These findings are different from those of many previous studies. The observed trends in residential property values in the target area are likely a characteristic response in flood-prone regions, where flood risk awareness is enhanced due to repeated flood damage.

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Section: Discussionsupporting

confidence: 88%

Section: Introductionmentioning

confidence: 99%

How Does Residential Property Market React to Flood Risk in Flood-Prone Regions? A Case Study in Nagoya City

Inoue

Hatori

2021

Front. Water

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“…Of the few non-cross-sectional studies, results are mixed: In Center County, PA, rezoning into a floodplain reduced property values, but rezoning out of a floodplain had no effect (9). In New York City, NY, the release of preliminary new flood maps reduced property values, but the effect differed sharply between properties that had and had not flooded during Superstorm Sandy (10).…”

mentioning

confidence: 99%

The effect of information about climate risk on property values

Hino

Burke

2021

Proc. Natl. Acad. Sci. U.S.A.

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Floods and other climate hazards pose a widespread and growing threat to housing and infrastructure around the world. By reflecting climate risk in prices, markets can discourage excessive development in hazardous areas. However, the extent to which markets price these risks remains poorly understood. Here we measure the effect of information about flood risk contained in regulatory floodplain maps on residential property values in the United States. Using multiple empirical approaches and two decades of sales data covering the universe of homes in the United States, we find little evidence that housing markets fully price information about flood risk in aggregate. However, the price penalty is larger for commercial buyers and in markets where buyers are more risk aware, suggesting that policies to improve risk communication could influence market outcomes. Our findings indicate that houses in flood zones in the United States are currently overvalued by a total of $43.8 billion (95% confidence interval: $32.6 to $55.6 billion) based on the information in publicly available flood hazard maps alone, raising concerns about the stability of real estate markets as climate risks become more salient and severe.

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“…See alsoGibson et al (2019), who study the effect of the 2012 B-W reforms, flood map changes, and the impact of Hurricane Sandy on property values in New York.…”

mentioning

confidence: 99%

Neglected No More: Housing Markets, Mortgage Lending, and Sea Level Rise

Keys¹,

Mulder²

2020

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In this paper, we explore dynamic changes in the capitalization of sea level rise (SLR) risk in housing and mortgage markets. Our results suggest a disconnect in coastal Florida real estate: From 2013-2018, home sales volumes in the most-SLR-exposed communities declined 16-20% relative to less-SLR-exposed areas, even as their sale prices grew in lockstep. Between 2018-2020, however, relative prices in these at-risk markets finally declined by roughly 5% from their peak. Lender behavior cannot reconcile these patterns, as we show that both all-cash and mortgage-financed purchases have similarly contracted, with little evidence of increases in loan denial or securitization. We propose a demand-side explanation for our findings where prospective buyers have become more pessimistic about climate change risk than prospective sellers. The lead-lag relationship between transaction volumes and prices in SLR-exposed markets is consistent with dynamics at the peak of prior real estate bubbles.

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Climate Risk and Beliefs in New York Floodplains

Cited by 68 publications

References 71 publications

How Does Residential Property Market React to Flood Risk in Flood-Prone Regions? A Case Study in Nagoya City

How Does Residential Property Market React to Flood Risk in Flood-Prone Regions? A Case Study in Nagoya City

The effect of information about climate risk on property values

Neglected No More: Housing Markets, Mortgage Lending, and Sea Level Rise

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