Flood hazards impact on neighborhood house prices: A spatial quantile regression analysis

This study examines whether being located within a 100-year floodplain has an impact on the price of residential single-family house sales using house sales data in the Fargo-Moorhead Metropolitan Statistical Area between 2000 and 2013. A spatial quantile regression is applied to investigate the flood hazards impact on conditional higher- vs lower- priced homes, while accounting for spatial autocorrelation. The findings show that the location within a floodplain reduces property value. Furthermore, the negative impact of flood hazards on property values are stronger among lower-priced homes, and weaker among higher-priced homes. In addition, the study examines if a major flood in 2009 had an impact on the home buyers' perception about flood risk. The results show that about a year after the major flood, home buyers responded the most, however, the effect quickly diminished after 2010. Across quantiles, the 2009 flood had more effect on lower-priced than higher-priced homes.