Waiting after the storm: the effect of flooding on time on the housing market in coastal Virginia

ABSTRACT

Flooding is the most common natural disaster experienced by many households and rising sea levels have made recurrent flooding events common in many coastal cities. This study uses a difference-in-differences model to estimate how the residential real estate market responds to significant flooding events. The analysis examines time-on-market for 137,348 residential property sales between 2007 and 2016 in southeast Virginia. This timeframe includes a Nor’easter, referred to as Nor’Ida, and Hurricane Irene. Results differentiate between high-risk (100-year flood plain) and low-risk (500-year flood plain) areas, and show that homes in the high-risk flood zones remain on the market 5–7 days longer. Our results suggest that the housing market cools down at a localized level after a severe weather event.

KEYWORDS:

• Housing market
• time-on-market
• Flood Hazard
• NFIP

JEL CLASSIFICATION:

• R21
• Q54

Acknowledgments

This paper was supported by the Commonwealth Center for Recurrent Flooding Resiliency.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The 100-year floodplain means there is a 1% chance of a flood occurring in any given year, while a 500-year floodplain denotes a 0.2% chance of a flood in any given year. See Michel-Kerjan, E. O. (2010) for more details on the NFIP.

² More information for can be found at: http://hvri.geog.sc.edu/SHELDUS/.