Home-buyer Sentiment and Hurricane Landfalls
Burrus, Robert T.; Graham Jr., J. Edward; Hall, WIlliam W.; Schuhmann, Peter W.
The researchers looked at how hurricanes impact real estate markets and home-buyer sentiment. Sentiment is related to the perception of risk by investors in the securities markets, but is not quantifiable, so the researchers looked at developing proxies. They used three proxies to determine the most meaningful one, which included the spread between listing and selling prices, the average days of a house on the market, and the number of single-family houses sold per month. They looked at homeowner sentiment from 1995 to 2002 in the Cape Fear region and the impact of Hurricanes Fran, Bonnie, and Floyd on the market. When they looked at the prices and days on the market, they found that after Bonnie there was not a difference in sentiment. Then after Fran there was some difference. Then after Floyd, more difference. The proxy impacted most was the days a home was on the market. The researchers concluded that the market suffers after successive hurricane landfalls, but that sentiment recovers a year or more after the hurricane.