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This paper examines data from the Cape Fear region of North Carolina, an area at elevated exposure to hurricanes and catastrophic risk. The findings support an earlier documented pattern of price declinations with successive hurricane landfalls. The findings also reveal a tempering of this trend in the years after the last major strike in 1999. A test statistic is constructed for the timing and intensity of the real estate market reaction to perceptions of catastrophic risk. A Chow test is used to frame market responses to repeated hurricane landfalls in the study area. The test reveals a structural shift in the housing market in the periods following the last two in a series of four hurricanes. Home prices recover and market stability returns in the years following the last storm. The findings are important to varied stakeholders in the coastal real estate market. [ABSTRACT FROM AUTHOR]

Although low-intensity hurricanes cause far less structural damage than high-intensity hurricanes, these weaker hurricanes do impact regional economic activity through “business interruption.” Because the strike frequencies of low-intensity hurricanes are orders of magnitude greater than those of stronger storms, the cumulative impact of frequent “business interruption” may be significant. Using Chamber of Commerce survey data, we estimate industry-specific business interruption losses for three low-intensity hurricanes striking the Wilmington, N.C., region. The average, per-storm regional impacts of business interruption, including direct, indirect, and induced impacts, are equivalent to between 0.8 and 1.23% of annual regional output, between 1.11 and 1.63% of regional employment, and between 1.21 and 1.81% of annual indirect business taxes. While these per-storm losses may appear small, the high strike frequencies of low-intensity hurricanes produce a cumulative (in expectation) impact equivalent to a high-intensity hurricane strike causing approximately $3.7 billion in damage. [ABSTRACT FROM AUTHOR]

We gather home sales data for the Cape Fear region of North Carolina and model residential real estate market activity in this coastal area between 1995 and 2000, a period of unprecedented hurricane activity. We extend earlier research revealing an adverse relationship between home values and the series of hurricane strikes beginning in 1996. We construct a framework to consider the changing sentiment of the residential real estate market. Sentiment is the perception of risk by investors in the securities markets, proxied by such measures as trading volume and bid/ask spreads. We hold that residential real estate markets can also be framed by selected measures of sentiment. We employ three sentiment proxies: the spread between listing (asking) and selling prices, average days of a home on the market, and single-family homes sold per month. We find larger spreads and reduced monthly unit sales, but no significant effect upon the marketing time, in the region following the final hurricane landfalls. We believe that these measures of tempered sentiment are likely associated with perceptions of greater catastrophic risk, with the housing market disregarding early landfalls as little more than bad luck, but perhaps viewing later landfalls as evidence of increasing catastrophic risk in the study area. [ABSTRACT FROM AUTHOR]