Land Erosion and Coastal Home Values

This paper studies the extent to which coastal land erosion is capitalized into the value of waterfront residential properties in an area where continuous land erosion has been identified and well-documented. Our results suggest that the rate of land erosion negatively affects coastal residential property values. However, the negative effect of land erosion on transaction prices is only evident when the ratio of the property’s distance from the shore to the rate of erosion is sufficiently low. Moreover, we provide evidence that nonlocal buyers pay a premium for properties, which is correlated with levels of income, education and housing prices at their origin.