Determining the effect of abnormal temperatures on the housing market

ABSTRACT

Extreme weather events have increased in frequency and are expected to grow in intensity over time. To examine perceptions of this abnormal weather, I model the relationship between degree days and the housing market. The results provide evidence that abnormal increases in cooling and heating degree days negatively affect housing prices, with cooling degree days having a larger impact. Adding to these estimates, the housing price capitalizations of heating and cooling related housing attributes are shown to vary with recent abnormal temperatures.

KEYWORDS:

• Hedonic
• degree days
• attribute capitalization
• abnormal weather

JEL CLASSIFICATION:

• Q51
• Q54
• R21

Disclosure statement

No potential conflict of interest was reported by the author.