Housing Market Capitalization of Pipeline Risk

Evidence from a Shock to Salience and Awareness

Evan Herrnstadt and Richard L. Sweeney


We study how house prices responded to a deadly 2010 pipeline explosion in San Bruno, CA, which shocked both attention and information. We find that home prices near pipelines in the Bay Area declined by 2% initially, but this gap quickly dissipated. We see no response among properties similarly exposed in other markets, nor in response to an informational letter sent to households the following year. These results suggest that homebuyers are willing to pay to avoid pipeline risk when the issue has their attention, but that this attention is hard to capture and fleeting.