Induced earthquakes and housing markets: Evidence from Oklahoma

This paper examines the impact of earthquakes on residential property values using sales data from Oklahoma from 2006 to 2014. Before 2010, Oklahoma had only a couple of earthquakes per year that were strong enough to be felt by residents. Since 2010, seismic activity has increased, bringing potentially damaging quakes several times each year and perceptible quakes every few days. Using repeat-sales and difference-in-differences models, we estimate that prices decline by 3-4 percent after a home has experienced a moderate earthquake measuring 4 or 5 on the Modified Mercalli Intensity Scale. Prices can decline 9 percent or more after a potentially damaging earthquake with intensity above 6. We also find significant increases in the time-on-market after earthquake exposures. Our findings are consistent with the experience of an earthquake revealing a new disamenity and risk that is then capitalized into house values.