Evidence of the dynamic response of housing values to a sudden oak death infestation

Abstract

Sudden oak death (SOD), caused by the non-indigenous forest pathogen Phytophthora ramorum, causes substantial mortality in coast live oak (Quercus agrifolia) and several other oak species on the Pacific Coast of the United States. Quasi-experimental hedonic models examine the effect of SOD on property values with a dataset that spans more than two decades including a decade of transactions before and after the invasion. The long study period allows for a unique contribution to the hedonic literature on natural hazards by studying the dynamic response of property values to an invasive species. The findings suggest property discounts of 2 to 5 percent for homes near infested oak woodlands, which are long lasting because of the continually dying oaks in the woodlands. Greater discounts of 5 to 8 percent occur if dying oaks are on the properties of homeowners, which are transitory because dying oaks are removed from homeowner properties. We compare recent hedonic modeling approaches including quasi-experimental, with spatial fixed-effects for a) communities, and b) parcels ‘repeat sales’, and spatial lag and error models to address bias from homeowner preferences, correlated with the price of a house and the proximity of a house to a SOD infection, which are not observed by the analyst.

Parent Publication

• Proceedings of the Sudden Oak Death Fourth Science Symposium

Citation

Kovacs, Kent F.; Holmes, Thomas P.; Englin, Jeffrey E.; Alexander, Janice. 2010. Evidence of the Dynamic Response of Housing Values to a Sudden Oak Death Infestation. In: Frankel, Susan J.; Kliejunas, John T.; Palmieri, Katharine M. 2010. Proceedings of the Sudden Oak Death Fourth Science Symposium. Gen. Tech. Rep. PSW-GTR-229. Albany, CA: U.S. Department of Agriculture, Forest Service, Pacific Southwest Research Station. pp. 154-168