A HEDONIC PRICE APPROACH TO FLOOD RISK AND PROPERTY VALUE IN THE GREATER MIAMI AREA
G, Straubing Rebecca
G, Straubing Rebecca
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Abstract
This study investigates the relationship between property value and flood risk in Miami-Dade County Florida. Miami-Dade County has gained a lot of attention in the media for its high risk of catastrophic flooding. As climate change predictions have grown more severe, flood risk is a factor property buyers may want to consider. This study uses hedonic pricing to see if the flood risk in the county affects the price of the home. In Miami-Dade County, properties near a public beach are considered desirable. This paper specifically looks at the interaction between distance from the beach and flood risk. This paper found Low flood risk homes have significantly lower prices than high flood risk homes if they are close to the beach (less than 45 miles), but have significantly higher prices than high risk homes that are far from the beach (at least 45 miles away). Specifically, when a home is that far away from the water, being flood safe adds a positive value to a property by around 14%. Similarly, being in a high flood risk (FEMA AE) has a positive marginal effect on the price of a home if it is close enough to a public beach.
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2019-01-01