Flood Hazards and Urban Housing Markets: The Effects of Katrina on New Orleans

McKenzie, Russell; Levendis, John

doi:10.1007/s11146-008-9141-3

Cited by 64 publications

(21 citation statements)

References 16 publications

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“…Montz (1987) theorized that the impact of SFHA designation on property value may be negatively related to the amount of time since the last flood. Support for this theory has been provided by, among others, Speyrer and Ragas (1991); Bin and Polasky (2004); Kousky (2010) and McKenzie and Levendis (2010) all report that price impacts on single-family houses in a SFHA tend to be larger after a flood occurs compared to beforehand. Therefore, the low discount discovered in the present study may be due to the fact that the last catastrophic flood in the study area occurred approximately a century ago and the last local flood that resulted in a Presidential disaster declaration occurred during the second year of our 23 year study period; 1989 (causing only $4.3 million in damage; an inconsequential number compared to the damage caused in other flood studies).…”

Section: Resultsmentioning

confidence: 92%

The Impact of a Letter of Map Amendment on Floodplain Property Value

Larsen

2012

American Journal of Economics and Business Administration

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Substantial empirical evidence indicates properties across the United States that are located within a Special Flood Hazard Area (SFHA) sell at a discount compared to similar properties otherwise located. This result is also true in our sample. Researchers have suggested the price discount equals a combination of the present value of the required flood insurance premiums and the value of uninsurable costs. To identify the portion of the discount applicable to each component, analysts have been required to estimate applicable insurance premiums and to assume a discount rate. The present paper presents a methodology that does not require these prerequisites, but still enables separation of the discount into the two components. in the united states, the federal emergency management agency sometimes issues a Letter of Map Amendment (LOMA), which exempts a property from the requirement that it be insured against flood damage as a prerequisite to the owner obtaining a federally-related mortgage loan. Therefore, any price difference between non-LOMA SFHA properties and similar properties outside the SFHA should continue to equal the sum of the two components and any significant price difference between SFHA properties with a LOMA and similar properties located outside the SFHA should equal the present value of the uninsurable costs only. Hedonic regression is used to test this proposal by comparing the selling prices of single-family house transactions for properties located within and outside the SFHA in Kettering, Ohio. In our sample, no significant uninsurable costs were detected.

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Section: Resultsmentioning

confidence: 92%

The Impact of a Letter of Map Amendment on Floodplain Property Value

Larsen

2012

American Journal of Economics and Business Administration

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“…If the flood caused updating of risks that upset the market equilibrium, but transaction costs of moving were high, the coefficients estimated here will be lower than if homeowners could costlessly relocate after the fiood. It has been found that elevated homes in flood prone areas of New Orleans command a price premium and that this premium increased after Hurricane Katrina (McKenzie and Levendis 2008). To test for such postdisaster effects in St. Louis County, I interacted the elevation variable with the postfiood and the 100-year floodplain variables (not reported; available from the author).…”

Section: Ffect Of the ¡993 Floodmentioning

confidence: 99%

Learning from Extreme Events: Risk Perceptions after the Flood

Kousky¹

2010

Land Economics

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“…The results show that higher elevations have higher property values, indicating that there may be some variation of flood risk and housing prices within the 100‐year flood plain. McKenzie and Levendix (2010) use pre‐ and post‐hurricane Katrina data and similarly conclude that homes with higher elevation command a premium over lower elevation homes in New Orleans. Their results also indicate that Katrina increased the premium for higher elevation homes, suggesting a greater flood risk discount for frequent or recent events.…”

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confidence: 95%

Flooding and Liquidity on the Bayou: The Capitalization of Flood Risk into House Value and Ease‐of‐Sale

Turnbull

Zahirovic‐Herbert

Mothorpe

2012

Real Estate Economics

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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.

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Flood Hazards and Urban Housing Markets: The Effects of Katrina on New Orleans

Abstract: Housing markets, Hedonic estimation, Flooding, Elevation, Housing supply, Katrina,

Cited by 64 publications

References 16 publications

The Impact of a Letter of Map Amendment on Floodplain Property Value

The Impact of a Letter of Map Amendment on Floodplain Property Value

Learning from Extreme Events: Risk Perceptions after the Flood

Flooding and Liquidity on the Bayou: The Capitalization of Flood Risk into House Value and Ease‐of‐Sale

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