Economic diversification and the resiliency hypothesis: Evidence from the impact of natural disasters on regional housing values

N Edward Coulson; Shawn J McCoy; Ian K McDonough

doi:10.1016/j.regsciurbeco.2020.103581

Economic diversification and the resiliency hypothesis: Evidence from the impact of natural disasters on regional housing values

Reg Sci Urban Econ. 2020 Nov:85:103581. doi: 10.1016/j.regsciurbeco.2020.103581. Epub 2020 Aug 30.

Authors

N Edward Coulson¹, Shawn J McCoy², Ian K McDonough²

Affiliations

¹ Paul Merage School of Business, University of California, Irvine, 4293 Pereira Dr. #5300, Irvine, CA, 92617, USA.
² University of Nevada, Las Vegas, 4505 S. Maryland Parkway, Box 456005, Las Vegas, NV, 89154, USA.

Abstract

We estimate the effect regional economic diversification has on the resiliency of the U.S. housing market, treating the spatial and temporal variation in natural disasters as exogenous shocks to regional economies. Our study demonstrates that diversity dampens both the magnitude and the duration of the effects of a disaster on local real estate values. Implications of our findings for the potential benefits of diversification in regional economies are discussed.

Keywords: Housing prices; Natural disasters; Resiliency.