Building Codes, Wind Contours, and House Prices

Abstract

A hedonic pricing model estimates the effect on house prices of the stricter 2002 Florida Building Code for three geographical areas with varying degrees of risk exposure in the Jacksonville, Florida area. Results show that houses built under the new, stricter code sold for an average premium of 12.33% relative to houses built under the less-strict code. Results also show that new-code properties in the riskiest Windborne Debris Region sold for about 4.7% more than houses built under the older, less strict code. The interior zones show that houses built under the stricter code sold for greater premiums. The post-catastrophe variables show that the two consecutive seasons of devastating hurricanes in 2004 and 2005 had an effect on buyer behavior and generally increased the building code premium.

Keywords: building code, Florida, risk exposure, hurricane