The effects of a voluntary property buyout and acquisition program on coastal housing markets: Evidence from New York

Abstract

The magnitude and direction of the economic effects of removing or retrofitting housing in hazard-prone coastal locations is an open empirical question. Using data from a voluntary buyout and acquisition program in the U.S. state of New York, we recover hedonic estimates of the property value impacts of government-acquired properties in the state's coastal counties. Both a repeat sales difference-in-differences approach and an event study addressing treatment effect heterogeneity suggest that buyouts and acquisitions have sizable negative effects on prices (−20 to −10 percent) for homes sold adjacent (≤100 m) to participating properties. The spatial scale of the impacts differs across policy types, with negative effects attenuating after 100 m for buyouts but persisting for acquisitions up to 1200 m. These impacts are shown to approach zero four years after policy initiation, and the effect of buyouts may turn positive after five years. A disaggregated county-level analysis suggests spatial heterogeneity in price impacts, with positive effects in one county where most participating properties were buyouts and negative effects in counties where most properties were acquired and redeveloped. Our findings demonstrate coastal housing market implications of different policy outcomes that can inform government action in response to increased flood risk.