Short- and mid-term effects of the September 19 earthquake in Mexico city on the housing market

• Published in: International journal of disaster risk reduction 2022-09, Vol.79, p.103178, Article 103178
• Main Authors: Lara-Pulido, José Alberto, Arias-Martelo, Camilo, Jiménez-Quiroga, Carmina Isabel, Soloaga, Isidro, Uribe-Sánchez, Miguel, Guevara-Sanguinés, Alejandro
• Format: Article
• Language: English
• Subjects: Housing-market; Risk perception; Seismic risk
• ISSN: 2212-4209; 2212-4209
• DOI: 10.1016/j.ijdrr.2022.103178

The impact of natural disasters on price fluctuations in the real estate market has become an increasingly important field of study since the climate crisis is driving the sustained growth of expected risk in property buying. In Mexico City, for historical, geological, and soil reasons, earthquake damage is one of the most alarming risks perceived by property buyers. With data from real estate listing prices in the city (before and after the 2017 earthquake) and using a spatial difference-in-differences model, this work analyzes how closing the information gap on seismic risk affects properties prices. We found that a price discount on risky properties existed before the earthquake and increased in the short term after the event. This finding suggests that an adequate risk awareness policy can protect potential consumers and reduce market failures. However, the results have a limited scope since the database contains information on properties located in high-middle income areas. A similar study focused on low-income areas of the city should be done to inform public policy for the most vulnerable consumers.