Heterogeneity in the recovery of local real estate markets after extreme events: The case of Hurricane Sandy

Natural disasters can cause physical damage and provide information about flood risk. We find that the prices of one to three family homes in New York City hit by high storm surges during Hurricane Sandy dropped by 16% and remained 12% lower than pre-storm levels 6 years after the storm. Effects were concentrated in areas outside of pre-existing flood zones, where risks were less salient, and they were more persistent in lower income areas. Finally, flooding may have changed neighborhood demographic trends, as post-Sandy homebuyers in hard-hit areas had lower incomes and were less likely to be white.