Job Market Paper

Damage vs. Risk Perception: Why Do House Prices Recover After Hurricanes? 

Conference Presentations: 

MIT Climate and Real Estate Initiative Symposium (2022), AREUEA Doctoral Poster Session (2023), ARES Real Estate Program Leadership Conference and Research Symposium (2022), REALPAC/Toronto Metropolitan University Research Symposium (2022)

Abstract

I study house price dynamics following Hurricane Sandy to explain the common puzzling finding of a price drop, followed by a complete price recovery. Applying a quasi-experimental difference-in-differences research design on Zillow parcel-level sales, I show using FEMA data that the extent of direct damages drives the decline in house prices. The extent of remodeling expenditures, based on building permits, is found to be responsible for causing the return of prices to pre-storm levels. Comparing flood insurance take-up rates in the affected and non-affected areas within the floodplains, I find there is no revision in perceived risk.