Title

Flooding And Liquidity On The Bayou: The Capitalization Of Flood Risk Into House Value And Ease-Of-Sale

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. © 2012 American Real Estate and Urban Economics Association.

Publication Date

3-1-2013

Publication Title

Real Estate Economics

Volume

41

Issue

1

Number of Pages

103-129

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1111/j.1540-6229.2012.00338.x

Socpus ID

84874335122 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/84874335122

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