On the Geographic Balance of Risk and Amenity: Changes in Evacuation Zones and Their Ripples in Housing Prices in Pinellas County, FL

Abstract

Abstract This study considers the balance of amenities and coastal hazards on housing prices between 2000 and 2015. We test whether risk communication via hurricane evacuation zone (a proxy for storm-surge risk and coastal flooding) affects sales price while controlling for relevant property characteristics, beach frontage, flood zones, and proximity to the coast. Additionally, we employ a difference-in-difference technique to test whether two highly publicized updates to evacuation zone maps, which changed the status of many homes in the county, led to price penalties for homes. We focus our study on areas of the new evacuation zone maps that reclassified parcels into zones associated with higher coastal surge exposure. This approach allows us to isolate the effects of risk communication about a property independent of changes to its insurance premiums or actual hazard exposure. We find that amenities are associated with significant bonuses and hazard variables correlated with price penalties, and homes in areas reclassified “up” in hazard zone classification have lost value. Our findings shed light on how information changes about hazards may affect coastal real estate markets as concerns about coastal hazards and exposure to storm-related surges increase along with climate change.