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

Posted: 20 Oct 2008

See all articles by John B. Loomis

John B. Loomis

Colorado State University, Fort Collins - Department of Agriculture and Resource Economics

Julie Mueller

affiliation not provided to SSRN

Armando Gonzalez-Caban

Department of Agriculture (USDA), Forest Service, Forest Service Fire Laboratory

Date Written: October, 17 2008

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.

Keywords: hedonic property method, forest fires, implicit prices, willingness to pay

Suggested Citation

Loomis, John B. and Mueller, Julie and Gonzalez-Caban, Armando, 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 (October, 17 2008). Journal of Real Estate Finance and Economics, Vol. 38, No. 2, 2009, Available at SSRN: https://ssrn.com/abstract=1286148

John B. Loomis (Contact Author)

Colorado State University, Fort Collins - Department of Agriculture and Resource Economics ( email )

B310 Andrew G. Clark
Fort Collins, CO 80523
United States
970-491-2485 (Phone)

Julie Mueller

affiliation not provided to SSRN ( email )

Armando Gonzalez-Caban

Department of Agriculture (USDA), Forest Service, Forest Service Fire Laboratory ( email )

Riverside, CA
United States

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