The impact of natural disasters on us home ownership

Abstract

Natural disasters are predicted to become more severe with climate change. Research on impacts of natural disasters on housing markets is mostly limited to hedonic property studies and does not consider impacts on home ownership. Combining historical data on natural disasters in the United States with household data, we use a differences-in-differences approach to estimate the effects of natural disasters on home ownership rates. Results indicate a 3–5-percentage-point decrease in the home ownership rate among households that migrate to areas hit by severe natural disasters. An updating of risk priors given additional information regarding recent disasters may be responsible for such decreases. These results improve our understanding of how natural disasters impact housing markets and inform urban policy responses to climate change.