Is the Risk of Sea Level Rise Capitalized in Residential Real Estate?

By J. Murfin, M. Spiegel, Jose A. Scheinkman. 2020

263 citations recorded by the source corpus.

Using a comprehensive database of coastal home sales merged with data on elevation relative to local tides, we compare prices for houses based on their inundation threshold under projections of sea level rise. The analysis separates the sensitivity of housing to rising seas from other confounding characteristics by exploiting cross-sectional differences in relative sea level rise due to vertical land motion. This provides variation in the expected time to inundation for properties of similar elevation and distance from the coast. In a variety of specifications and test settings, we find precisely estimated null results suggesting limited price effects.

Subfields: Atmospheric Science, Economics and Econometrics, Global and Planetary Change

View Paper: https://www.semanticscholar.org/paper/396416dbb1f3349d5bff338e318d0b9e114a6b69

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In Economics and Econometrics

Citations in the corpus

Does Climate Change Affect Real Estate Prices? Only If You Believe In It (2020, unknown): “This spatial feature of our equilibrium also distinguishes our work from the literature of search frictions in the housing market, such as Piazzesi and Schneider (2009), Favara and Song (2014), and Piazzesi and Stroebel (2015).”
Do investors care about carbon risk? (2020, background): “However, in a related study Murfin and Spiegel (2020) find no evidence that sea-level-rise risk is reflected in residential real estate prices.”
The Pricing of Carbon Risk in Syndicated Loans: Which Risks are Priced and Why? (2021, background): “4 Physical climate change risks, however, do not seem to be priced in correctly (Hong et al (2019), Murfin and Spiegel (2020), among others).”
Finance, climate-change and radical uncertainty: Towards a precautionary approach to financial policy (2021, background): “Physical risks can also manifest at the household sector, by threatening to reduce asset or collateral values, through direct damage on residential property or loss or write-offs in homes at high-risk locations (Monnin, 2018a; Armal et al., 2020; Baldauf et al., 2020; Murfin and Spiegel, 2020).”