Rental Affordability in the Wake of Natural Disasters

Keywords: hurricanes, housing, FEMA, rentals, Florida
Session Type: Virtual Paper
Day: Wednesday
Session Start / End Time: 4/7/2021 04:40 PM (Pacific Time (US & Canada)) - 4/7/2021 05:55 PM (Pacific Time (US & Canada))
Room: Virtual 41

Abstract

Natural disasters have been increasing in intensity at the same time that rental affordability has been declining in many cities. The intersection of these two trends presents an important challenge for policymakers and underscores the convergence between geography and economy in the U.S. This paper presents a new dataset to look at this intersection, merging property-level rental outcomes with ZIP code-level hurricane incidence, damage, and government assistance. We construct a panel difference-in-differences model that estimates the effect of the hurricanes from 2000Q1 to 2019Q3 on zip codes throughout the state of Florida. Results indicate that rents per unit and rents per square foot increase by almost 7% in the quarter following a hurricane, but the effect diminishes over the next 2-4 years. Meanwhile, vacancy rates decrease slightly and then increase sharply and persistently, though their effect also moderates in the later years. The inverse relationship between rent levels and vacancy rates distinguish the geography of post-disaster rental markets from regular ones. We propose several possible explanations for these findings that change our understanding of post-disaster recovery for renters and rental buildings which and how some of the most vulnerable members of society are affected by market failures in times of distress.