Title
Flooding and Liquidity on the Bayou: The Capitalization of Flood Risk into House Value and Ease-of-Sale
Abbreviated Journal Title
Real Estate Econ.
Keywords
NATURAL HAZARDS; PROPERTY-VALUES; LISTING PRICE; REAL-ESTATE; MARKET; LOCATION; MODELS; TIME; EXTERNALITIES; Business, Finance; Economics; Urban Studies
Abstract
The existing literature focuses on how perceived flood risk affects house value. Search theory, however, implies that flood risks will be capitalized into both house price and liquidity. This article draws on search theory to develop an empirical approach for estimating flood risk capitalization into both price and selling time. The results show the mix of price and liquidity capitalization varies by level of flood risk as well as across housing market phases. Regardless of the specific capitalization pattern, the results illustrate that focusing solely on price without allowing for concomitant liquidity capitalization can yield estimates that understate the full impact of flood risk on house transactions.
Journal Title
Real Estate Economics
Volume
41
Issue/Number
1
Publication Date
1-1-2013
Document Type
Article
Language
English
First Page
103
Last Page
129
WOS Identifier
ISSN
1080-8620
Recommended Citation
"Flooding and Liquidity on the Bayou: The Capitalization of Flood Risk into House Value and Ease-of-Sale" (2013). Faculty Bibliography 2010s. 4780.
https://stars.library.ucf.edu/facultybib2010/4780
Comments
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