<scp>Flood Hazards, Insurance Rates, and Amenities: Evidence From the Coastal Housing Market</scp>

Bin, Okmyung; Kruse, Jamie Brown; Landry, Craig E.

doi:10.1111/j.1539-6975.2007.00248.x

Cited by 249 publications

(208 citation statements)

References 36 publications

Supporting

Mentioning

198

Contrasting

Unclassified

Order By: Relevance

“…Several studies utilize this relationship to test the expected utility theory (MacDonald et al, 1987;Bin 10 and Polasky, 2004;Bin et al, 2008). If, instead, the claim paid by the insurer is perceived to be less than the losses caused by the earthquake, then the household's MWP would be negative In Japan, as in any other countries, earthquake damage is nowhere near fully insured, and is heavily loaded reflecting the systematic nature of the risk associated with a major earthquake close to Shizuoka or Aichi prefectures.…”

Section: U U mentioning

confidence: 99%

“…Among others, Bin and Polasky (2004) and Hallstrom and Smith (2005) investigate the effect of specific hurricane events -Floyd and Andrew -on individuals' perception of flood risks. Shilling, Benjamin and Sirmans (1987), MacDonald, Murdoch, andWhite (1987), MacDonald, White, Taube, andHuth (1990) and Bin, Kruse, and Landry (2008) have also evaluated the effect of flood hazard on housing values. 6 nation-wide longitudinal data that covers areas with near-miss incidents of massive earthquakes, i.e.…”

Section: Previous Studiesmentioning

confidence: 99%

See 1 more Smart Citation

Earthquake risk and housing prices in Japan: Evidence before and after massive earthquakes

Naoi

Seko

Sumita

2009

Regional Science and Urban Economics

110

View full text Add to dashboard Cite

The hedonic pricing approach is used to examine whether homeowners and/or renters alter their subjective assessments of earthquake risks after massive earthquakes. Using nation-wide household panel data coupled with earthquake hazard information and records of observed earthquakes, we find that there are some modifications of individuals' assessments of earthquake risk in both cases. We have carefully taken into consideration the bias stemming from the use of objective risk variables as a proxy for individual risk assessments. Our results suggest that the price discount from locating within a quake-prone area is significantly larger soon after earthquake events than beforehand. We argue that the most likely interpretation for this result is that households tend to underestimate earthquake risk if there has not been a recent occurrence. AbstractThe hedonic pricing approach is used to examine whether homeowners and/or renters alter their subjective assessments of earthquake risks after massive earthquakes. Using nation-wide household panel data coupled with earthquake hazard information and records of observed earthquakes, we find that there are some modifications of individuals' assessments of earthquake risk in both cases. We have carefully taken into consideration the bias stemming from the use of objective risk variables as a proxy for individual risk assessments. Our results suggest that the price discount from locating within a quake-prone area is significantly larger soon after earthquake events than beforehand. We argue that the most likely interpretation for this result is that households tend to underestimate earthquake risk if there has not been a recent occurrence.JEL classification: R20, C23.

show abstract

Section: U U mentioning

confidence: 99%

Section: Previous Studiesmentioning

confidence: 99%

Earthquake risk and housing prices in Japan: Evidence before and after massive earthquakes

Naoi

Seko

Sumita

2009

Regional Science and Urban Economics

110

View full text Add to dashboard Cite

show abstract

“…However, location within a flood zone that was vulnerable to wave action was associated with higher property values due to the substantial premiums that appear to be associated with proximity to coastal water. Bin et al [41] in 2008 used a spatial autoregressive model to investigate the effects of differential flood risks (100-year floodplain and 500-year floodplain) on property values, controlling for amenities associated with proximity to water. Without controlling for amenities, floodplain location appears to have no effect on housing value.…”

Section: The Use Of Hedonic Approach For the Assessment Or Urban Qualitymentioning

confidence: 99%

Assessing the Impact of Urban Improvement on Housing Values: A Hedonic Pricing and Multi-Attribute Analysis Model for the Historic Centre of Venice

et al. 2017

View full text Add to dashboard Cite

Abstract:The Hedonic Pricing Method is one of the principal assessment methods for evaluating services and resources not normally exchanged on the market. However, the method is often unable to account for the great variety of qualities in an urban context and faces scarce and heterogeneous market data. This paper presents a model for the valuation of benefits generated by environmental and urban improvement investments adopting a mixed hedonic-multi-attribute procedure for modeling a value function of urban real estate values. The peculiarity of the model is that the independent variables are aggregated indicators, which synthetize more detailed characteristics. Using the expertise of real estate agents, all relevant variables influencing real estate values were weighted and synthetized in a set of cardinal indicators. Next, market prices were used to calibrate a hedonic function that transforms the cardinal indicators into real estate values. The valuation model was integrated into a GIS for mapping the housing value, and its variation induced by urban investment. The proposed model pointed out plausible and robust results, in particular, the possibility to use any available information, such as location, position, technical and economic characteristics of buildings, and organize it in a flexible and transparent way, and to keep evident the role of each characteristic through the hierarchical structure of the model. The model was applied to the real estate market of Venice to test the effects of the MOSE project (Electromechanical Experimental Module) for the protection of Venice from high tides. The results of the application showed a relevant increase in real estate values in the center of Venice, especially related to property in ground floor units, of about 1.4 billion €.

show abstract

“…This vast literature covers issues such as noise pollution, water contamination and proximity to hazardous waste sites or overhead powerlines (see Boyle and Kiel, 2001 for a review of 30 papers). Hedonic models are also frequently utilized in understanding the impact of natural disasters, such as flooding (Macdonald et al, 1987;Bin et al, 2008), forest fires (Loomis, 2004;Mueller et al, 2009;Stetler et al, 2010) and hurricanes (Simmons et al, 2002;Hallstrom and Smith, 2005). While the precise form of the model and research design varies in many of these papers, the basic proposition is that the application of a hedonic regression framework makes it possible to discern a discount in property prices that reflects the impact (or risk) of one of these negative external events.…”

mentioning

confidence: 99%

Modelling the impact of earthquake activity on real estate values: a multi-level approach

Keskin

Dunning

Watkins

2017

JERER

View full text Add to dashboard Cite

Purpose This paper aims to explore the impact of a recent earthquake activity on house prices and their spatial distribution in the Istanbul housing market. Design/methodology/approach The paper uses a multi-level approach within an event study framework to model changes in the pattern of house prices in Istanbul. The model allows the isolation of the effects of earthquake risk and explores the differential impact in different submarkets in two study periods – one before (2007) and one after (2012) recent earthquake activity in the Van region, which although in Eastern Turkey served to alter the perceptions of risk through the wider geographic region. Findings The analysis shows that there are variations in the size of price discounts in submarkets resulting from the differential influence of a recent earthquake activity on perceived risk of damage. The model results show that the spatial impacts of these changes are not transmitted evenly across the study area. Rather it is clear that submarkets at the cheaper end of the market have proportionately larger negative impacts on real estate values. Research limitations/implications The robustness of the models would be enhanced by the addition of further spatial levels and larger data sets. Practical implications The methods introduced in this study can be used by real estate agents, valuers and insurance companies to help them more accurately assess the likely impacts of changes in the perceived risk of earthquake activity (or other environmental events such as flooding) on the formation of house prices in different market segments. Social implications The application of these methods is intended to inform a fairer approach to setting insurance premiums and a better basis for determining policy interventions and public investment designed to mitigate potential earthquake risk. Originality/value The paper represents an attempt to develop a novel extension of the standard use of hedonic models in event studies to investigate the impact of natural disasters on real estate values. The value of the approach is that it is able to better capture the granularity of the spatial effects of environmental events than the standard approach.

show abstract

Flood Hazards, Insurance Rates, and Amenities: Evidence From the Coastal Housing Market

Cited by 249 publications

References 36 publications

Earthquake risk and housing prices in Japan: Evidence before and after massive earthquakes

Earthquake risk and housing prices in Japan: Evidence before and after massive earthquakes

Assessing the Impact of Urban Improvement on Housing Values: A Hedonic Pricing and Multi-Attribute Analysis Model for the Historic Centre of Venice

Modelling the impact of earthquake activity on real estate values: a multi-level approach

Contact Info

Product

Resources

About