TECHNICAL PAPERS
Nov 1, 2006

Real Estate Market Response to Coastal Flood Hazards

Publication: Natural Hazards Review
Volume 7, Issue 4

Abstract

This study estimates the effects of flood hazard on residential property values using a hedonic property price method. We utilize digital flood maps coupled with extensive residential property sales records between September 2000 and September 2004 from Carteret County, North Carolina. Carteret County is a coastal county that contains numerous floodplains including areas subject to wave action. Our results indicate that on average property values are 5–10% lower if located within a flood zone that is not subject to wave action. However, location within a flood zone that is vulnerable to wave action is associated with higher property values. We find that, in most inland areas, price differentials for flood risk are roughly equivalent to the capitalized value of flood insurance premiums. However, the risk of coastal flooding seems inconsequential in determining property values due to the substantial premiums that appear to be associated with proximity to coastal water.

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Acknowledgments

The writers thank Craig Landry and three anonymous reviewers for useful comments, Barry Blackburn for providing Carteret County property parcel data, and Greg Meyer for providing excellent research assistance.

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Information

Published In

Go to Natural Hazards Review
Natural Hazards Review
Volume 7Issue 4November 2006
Pages: 137 - 144

History

Received: Oct 3, 2005
Accepted: Feb 27, 2006
Published online: Nov 1, 2006
Published in print: Nov 2006

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Authors

Affiliations

Okmyung Bin
Assistant Professor of Economics, East Carolina Univ., Greenville, NC 27858-4353.
Jamie Brown Kruse
Professor of Economics and Director, Center for Natural Hazards Research, Thomas Harriot College of Arts and Sciences, East Carolina Univ., Brewster A-116, Greenville, NC (corresponding author). E-mail: [email protected]

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