Fires in the Built Environment and Residential Market Demand

Abstract

Using nationwide data on multifamily residential transactions in South Korea, we investigate how large-scale fires in the built environment affect housing markets. We make use of geo-spatial data and apply the difference-in-differences research design to show that fires within an apartment complex cause an approximately 9 percent decline in housing prices over a 1-2 month-long period. In contrast, fires that occur slightly farther away or in non-residential buildings have no significant effect. Text mining analysis further suggests that greater media coverage—often associated with fires in nonresidential structures—does not necessarily result in larger price declines.