The Effect of Racial Composition on Neighborhood Housing Prices: Evidence from Hurricane Katrina-Induced Migration

45 Pages Posted: 24 Jan 2021 Last revised: 12 Nov 2022

See all articles by Madeleine I G Daepp

Madeleine I G Daepp

Microsoft Corporation - Microsoft Research - Redmond

devin michelle bunten

MIT

Joanne W. Hsu

University of Michigan at Ann Arbor - Institute for Social Research (ISR)

Date Written: November 11, 2022

Abstract

Urban housing markets are characterized by racial sorting, but equilibrium prices respond to marginal buyers and thus may mask underlying preferences for segregation. Large migration shocks can make visible these otherwise inframarginal preferences. We study the effects of Hurricane Katrina-induced displacement on housing markets in receiving neighborhoods in Texas, where 1 in 5 New Orleanians relocated. Using an event study design, we find that the relocation of 100 additional Katrina survivors to a receiving ZIP code is associated with a 2.2% decline in relative house prices five years after the storm. This effect is driven by responses to movers from predominantly Black origin blocks. We argue that our findings are best explained by a preference for segregation on the part of incumbent White residents. In this case, racial stratification in the effect of a disaster is followed by racial stratification in economic responses.

Keywords: Residential Mobility, Disaster-Induced Displacement, Hurricane Katrina, Housing Prices, Regional Migration, Segregation

JEL Classification: R21, R23, R31

Suggested Citation

Daepp, Madeleine I G and bunten, devin michelle and Hsu, Joanne W., The Effect of Racial Composition on Neighborhood Housing Prices: Evidence from Hurricane Katrina-Induced Migration (November 11, 2022). Journal of Urban Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3740093 or http://dx.doi.org/10.2139/ssrn.3740093

Madeleine I G Daepp (Contact Author)

Microsoft Corporation - Microsoft Research - Redmond ( email )

Building 99
Redmond, WA
United States

Devin michelle Bunten

MIT

77 Massachusetts Avenue
Cambridge, MA 02139
United States

HOME PAGE: http://www.devinbunten.com

Joanne W. Hsu

University of Michigan at Ann Arbor - Institute for Social Research (ISR) ( email )

Ann Arbor, MI 48106-1248
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
179
Abstract Views
1,057
Rank
310,774
PlumX Metrics