Do repeated wildfires change homebuyers' demand for homes in high-risk areas? A hedonic analysis of the short and long-term effects of repeated wildfires on house prices in Southern California

Julie Mueller, John Loomis, Armando González-Cabán

Research output: Contribution to journalArticle

41 Scopus citations

Abstract

Unlike most hedonic studies that analyze the effects of a one-time event, this paper analyzes the effects of forest fires that are several years apart in a small geographical area. We find that repeated forest fires cause house prices to decrease for houses located near the fires. We test and reject the hypothesis that the house price reduction from one fire is equal to the house price reduction from a second fire. The first fire reduces house prices by about 10%, while the second fire reduces house prices by nearly 23%, a statistically significant difference. The pattern of these results are robust to several alternative econometric specifications.

Original languageEnglish (US)
Pages (from-to)155-172
Number of pages18
JournalJournal of Real Estate Finance and Economics
Volume38
Issue number2
DOIs
StatePublished - Feb 1 2009

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Keywords

  • Forest fires
  • Hedonic property method
  • Implicit prices
  • Willingness to pay

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Urban Studies

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