Short- and mid-term effects of the September 19 earthquake in Mexico city on the housing market

The impact of natural disasters on price fluctuations in the real estate market has become an increasingly important field of study since the climate crisis is driving the sustained growth of expected risk in property buying. In Mexico City, for historical, geological, and soil reasons, earthquake damage is one of the most alarming risks perceived by property buyers. With data from real estate listing prices in the city (before and after the 2017 earthquake) and using a spatial difference-in-differences model, this work analyzes how closing the information gap on seismic risk affects properties prices. We found that a price discount on risky properties existed before the earthquake and increased in the short term after the event. This finding suggests that an adequate risk awareness policy can protect potential consumers and reduce market failures. However, the results have a limited scope since the database contains information on properties located in highmiddle income areas. A similar study focused on low-income areas of the city should be done to inform public policy for the most vulnerable consumers.

Automated summary

The climate crisis has led to an increased focus on the impact of natural disasters on price fluctuations in the real estate market. In Mexico City, earthquake damage is seen as a significant risk by property buyers. This study examines the effect of closing the information gap on seismic risk by analyzing real estate listing prices before and after the 2017 earthquake. The findings suggest that there was already a price discount on risky properties before the earthquake, which increased in the short term after the event.