The Effects of Tornadoes on Housing Prices in Moore, Oklahoma

Abstract

This paper examines the effects of four significant tornadoes on housing prices in Moore, Oklahoma. We use a hedonic difference-in-difference approach by considering transactions made preceding and following major tornadic events in Moore (occurring in 1999, 2003, 2010, and 2013). Our dataset spans nearly 30,000 housing transactions between 1990 and 2020. The length of tornado impacts is evaluated using a set of time indicators for the years leading up to (and after) the tornadoes. We find a 2-5% decrease in housing prices during the first year after a tornado for houses in the destructive path. However, no such impacts exist in years 2-7. We also employ three different specifications (OLS, spatial lag, and spatial error) to find the most appropriate model for considering the potential spatial processes at work. The results are largely similar across specifications.