Housing and Disasters
Friday, Jan. 3, 2020 2:30 PM - 4:30 PM (PDT)
- Chair: Jessie Handbury, University of Pennsylvania
Heterogeneity in the Recovery of Local Real Estate Markets After Extreme Events: The Case of Hurricane Sandy
AbstractThis paper examines the effect of Hurricane Sandy on local real estate markets in New York City. A natural disaster, like Sandy, generates two important shocks that can affect real estate markets: it creates physical blight and it provides new information about the risk of future damage. Unlike previous research, we consider how the information provided by the storm differs inside and outside of official flood zones and the role of localized economic conditions in mitigating storm-induced blight. Results indicate that the price of 1-3 family homes that were hit by high storm surges drop by about 16 percent and remain 12 percent lower than pre-storm levels six years after the storm. We show that these long-term effects are concentrated in areas outside of existing flood zones and in low-income neighborhoods. Properties in higher income neighborhoods experience large initial price shocks but then mostly recover, while those in lower income areas appear to experience a delayed response and exhibit no sign of recovery. Finally, the storm led to a change in the composition of homebuyers in storm surge areas that were low-income and outside the flood zone. After the storm, homebuyers in those areas were more likely to be black and Hispanic, suggesting that the flooding and damage may have shifted the nature of neighborhood change that was underway prior to the storm. Preliminary analyses of rebuilding activity suggest that any price decline is due more to new information about risk than persistent blight.
The Effect of Federal Assistance on Household Finance and Business Survival after a Natural Disaster
Abstract"Natural disasters are shocks to income, wealth, and capital. The US
government has a long history of federal assistance following natural
disasters. The implicit assumption is that savings, credit markets, and
existing insurance are insufficient to smooth the negative financial consequences of a natural disaster. We are the first to estimate the causal effect of federal disaster cash grants on post-disaster financial outcomes. We use credit bureau data to analyze very large tornadoes that hit the US between 2002-2013 and which have block-level damage maps. We find that disaster-affected individuals who receive cash grants have $509 less in quarterly credit card debt in the three years after the disaster relative to disaster-affected individuals who did not receive cash grants. The cash grants do not reduce negative financial outcomes such as 90 day delinquency and foreclosure, but do increase migration from the
disaster-affected neighborhoods. Second, we measure the effect of the
cash grants on local businesses. There are 15% more establishments and 28% more employees after a disaster in neighborhoods where residents receive cash grants. The increase in the number of establishments is due to a higher survival rate for existing establishments and concentrated among non-manufacturing establishments that rely on local demand.
Measuring Housing Stability with Consumer Reference Data
AbstractHousing instability for low-income renters has drawn greater attention recently, but measurement has limited research on policies to stabilize housing. Address histories from consumer reference data can be used to increase the quantity and quality of research on low-income renters. Consumer data tracks housing moves throughout the entire United States for most of the entire adult population. This paper shows that such data can measure housing stability for groups with very low income and extreme instability. For example, the data can track housing moves during natural disasters, at demolition of public housing, and for households at high risk of homelessness. Consumer data can track housing instability outcomes that are more common than shelter entry and cheaper to collect than surveys. Relative to existing administrative address histories, consumer data can track housing moves to exact addresses and across jurisdictions.
- R2 - Household Analysis
- Q5 - Environmental Economics