Real estate pricing research provides evidence that properties potentially exposed to perceived or actual risks may experience price impacts. Looking Under the Hood reviews publications that illustrate the theoretical, methodological, and data challenges faced by scholars and practitioners studying detrimental conditions and their impacts on property values.
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Cohen et al.[1] conducted a study analyzing the impact of Covid-19 cases on residential real estate prices in New York City. The study utilized a residential dataset of sale information obtained from the NYC Department of City Planning and the NYC Department of Finance, spanning from January 2003 to July 2020, which included approximately 48,000 transactions. Health information on the Covid-19 pandemic was sourced from the NYC Department of Health.
The study found that areas with high Covid-19 case rates had a negative impact on the prices of single-family residences, as evidenced by hedonic modeling. Additionally, there was a significant negative correlation between residential sale volume and coronavirus case rates. Specifically, for every 1,000 increase in positive case rates in a particular zip code, single family homes experienced a 10% property value diminution (PVD).
[1] Cohen, Jeffrey P., Felix L. Friedt and Jackson P. Lautier. “The Impact of the Coronavirus Pandemic on New York City Real Estate: First Evidence.” SSRN Electronic Journal (2021)