How access to federal recovery credit assistance influences future wealth trajectories after a natural disaster: The case of Hurricane Harvey

Abstract

Hurricane Harvey made landfall in Texas in August 2017. The Small Business Administration (SBA) provided direct-to-household loan aid for over $2.9 billion to assist recovery, twice as large as the Federal Emergency Management Agency's direct-to-household grant program to individuals impacted by the storm. The author examined the role of federal disaster home loan availability and wealth creation through changes in home values after Hurricane Harvey. The study linked SBA data to seasonally adjusted private market housing data. The author used a fixed-effect difference-in-difference regression with propensity score matching study design to estimate the effect of federal credit recovery assistance on log median home values over time. Communities receiving federal credit assistance saw a statistically significant 6.4 % faster increase in home values than communities receiving no federal credit assistance post-Harvey. In addition, communities with shorter (two weeks or less) wait times to receive SBA loans saw a 2 % faster rise in home value prices post-Harvey than communities with longer median wait times. While disaster damage influenced the receipt of assistance, pre-disaster wealth influenced the speed of the assistance received. Understanding at what points barriers to access arise within the delivery of aid, and the wealth outcomes of such inequities, point to clear ways policy changes may promote equitable recovery for all.