Property Values and Flood Risk: What Happens to Premiums over Time?
Bin, Okmyung; Landry, Craig E.
After Hurricane Floyd, property values in Pitt County were reduced when the properties were determined to be located in the flood plain. Bin and Landry used GIS data to look at the difference between homes sold in the flood plain between 1996–2002 and 2003–2008. It was difficult to distinguish the effect of Hurricane Floyd from other changes at the time, so they made a comparison between properties within flood zones and properties outside flood zones. They found that homes in a flood zone had a lower value in the 1998–2002 period. The home values reflected the awareness of the risk of flooding. There was no significant effect of location in the flood plain in the 2002–2008 period, which indicated that flood risk premiums associated with lower flood risk diminish over time.