The Effects of Flood Insurance on Housing Markets

Download or read book The Effects of Flood Insurance on Housing Markets written by Agustín Indaco and published by . This book was released on 2018 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze the role of food insurance on the housing markets of coastal cities. To do so we have assembled a parcel-level dataset including the universe of residential sales for three coastal urban areas in the United States - Miami-Dade county (2008-2015), New York city (2003-2016), and Virginia Beach (2000-2016) - matched with their FEMA food maps, which characterize the food risk level for each property. First, we compare trends in housing values and sales activity among properties on the foodplain, as defined by the National Flood Insurance Program (NFIP), relative to properties located elsewhere within the same city. Despite the heightened food risk in the last two decades, we did not find evidence of divergent trends, suggesting that food insurance may have cushioned the effects of the increase in food risk.Secondly, we analyze the effects of the recent reforms to the NFIP. In 2012 and 2014, Congress passed legislation that led to important increases in insurance premia and updates of food maps. We fail to find an effect of increases in premia on the values of foodplain properties in Virginia Beach and Miami-Dade, but we do find evidence of an effect in New York coinciding with the aftermath of hurricane Sandy. We also find some evidence of price changes for properties that experienced a change in risk classification in the new FEMA food maps. We conclude that the full effects of the 2012-2014 food insurance reforms have not yet taken place but will probably materialize in the future.