The Implication of the Increase in Storm Frequency and Intensity to Coastal Housing Markets

Abstract

This paper analyzes the effects of storm frequency and intensity on housing values in Miami‐Dade County over the last three decades. We found that higher storm exposure accelerates the housing price discount caused by augmented flood risk. The adverse effects of frequency and intensity have different impacts on perception of flood probabilities. Storm frequency affects housing prices in lower flood risk areas, whereas intensity influences the market in the higher risk zone, due to the different risk perceptions between the two factors. The results shed light on how increases in storm frequency and intensity impact the dynamics of flood risk perception in different floodplains on the coastal housing markets, suggesting future directions of flood prevention policies. Our findings highlight that one additional hurricane event is associated with a housing price discount of 1.3%. This adverse impact of frequency increases to 2.0% in the 500‐year floodplain zones, while higher storm intensity reduces housing values in the 100‐year floodplain zones by 1.5%.