Clear skies, dark waters: The Gulf oil spill and the price of coastal condominiums in Alabama

Christy Siegel, Steven B. Caudill, Franklin G. Mixon


This study focuses on the effect on real estate prices of the oil spill in the Gulf of Mexico in 2010.  Based on previous studies on the effects of water contamination on real estate, it is likely that this oil spill, which was not capped for three months, had a drastic effect on real estate prices.  Using data on condominium prices in Orange Beach and Gulf Shores, Alabama, from January 2009 to September 2011, econometric tests suggest that there was a $25 per square foot decrease in condominium sale prices after the oil spill, representing a decline in value of 12.1 percent.

Full Text:



Alpert, B. (2012) Environmental group sues EPA over dispersants used during Gulf oil spill, New Orleans Times-Picayune (6 August), online (, accessed on 13 August 2012.

Associated Press (2012) BP oil dispersants may have hurt Gulf of Mexico food chain, study finds, New Orleans Times-Picayune (31 July), online, (, accessed on 13 August 2012.

Bin, O. and Polasky, S. (2004) Effects of flood hazards on property values: Evidence before and after Hurricane Floyd, Land Economics, 80(4), 490-500.

Bleich, D. (2003) The reaction of multifamily capitalization rates to natural disasters, Journal of Real Estate Research, 25(2), 133-144.

Blomquist, G. C. (1974) The effect of electric utility power plant location on area property value, Land Economics, 50(1), 97-100.

Boyle, M. A. and Kiel, K.A. (2001) A survey of house price hedonic studies of the impact of environmental externalities, Journal of Real Estate Literature, 9(2), 117-144.

Braden, J.B., Feng, X., Freitas, L. and Won, D. (2010) Meta-functional transfer of hedonic property values: Application to Great Lakes areas of concern, Agricultural and Resource Economics Review, 39(1), 101-113.

Burrus, R.T., Jr., Graham, J.E., Jr., Hall, W.W. and Schuhmann, P.W. (2009) Home-buyer sentiment and hurricane landfalls, Appraisal Journal, 77(4), 338-347.

Dale, L., Murdoch, J.C., Thayer, M.A. and Waddell, P.A. (1999) Do property values rebound from environmental stigmas? Evidence from Dallas, Land Economics, 75(2), 311-26.

David, E.L. (1968) Lakeshore property values: A guide to public investment in recreation, Water Resources Research, 4(4), 697-707.

Deyak, T.A. and Smith, V.K. (1974) Residential property values and air pollution: Some new evidence, Quarterly Review of Economics and Business, 14(4), 93-100.

Epley, D. (2012) The Gulf oil spill and its impact on coastal property value using the before-and-after procedure, Journal of Real Estate Literature, 20(1), 127-137.

Glaeser, E.L., Gottlieb, J.D. and Gyourko, J. (2010) Can cheap credit explain the housing bubble? NBER Working Paper.

Graham, J.E., Hall, W.W. and Schuhmann, P.W. (2007) Hurricanes, catastrophic risk, and real estate market recovery, Journal of Real Estate Portfolio Management, 13(3), 179-190.

Hallstrom, D.G. and Smith, V.K. (2005) Market responses to hurricanes, Journal of Environmental Economics and Management, 50(3), 541-561.

Hansen, J.L., Benson, E.D. and Hagen, D.A. (2006) Environmental hazards and residential property values: Evidence from a major pipeline event, Land Economics, 82(4), 529-41.

Harrison, D., Jr. and Rubinfeld, D.L. (1978) Hedonic housing prices and the demand for clean air, Journal of Environmental Economics and Management 5(1), 81-102.

Himmelberg, C., Mayer, C. and Sinai, T. (2005) Assessing high house prices: Bubbles, fundamentals and misperceptions, Journal of Economic Perspectives, 19(4), 67-92.

Ibbotson, R.G. and Siegel, L.B. (1984) Real estate returns: A comparison with other investments, Real Estate Economics, 12(3), 219-242.

Jackson, T.O. (2002) Environmental contamination and industrial real estate prices, Journal of Real Estate Research, 23(1/2), 179-199.

Keys, B.J., Mukherjee, T., Seru, A. and Vig, V. (2009) Financial regulation and securitization: Evidence from subprime mortgage loans, Journal of Monetary Economics, 56(5), 700-720.

Leggett, C.G. and Bockstael, N.E. (2000) Evidence of the effects of water quality on residential land prices, Journal of Environmental Economics and Management, 39(2), 121-144.

Liow, K.H. (2006) Dynamic relationship between stock and property markets, Applied Financial Economics, 16(5), 371-376.

Liu, C.H., Hartzell, D.J., Greig, W. and Grissom, T.V. (1990) The integration of the real estate market and the stock market: Some preliminary evidence, Journal of Real Estate and Finance Economics, 3(3), 261-282.

McClelland, G.H., Schulze, W.D. and Hurd, B. (1990) The effect of risk beliefs on property values: A case study of a hazardous waste site, Risk Analysis, 10(4), 485-497.

McGibany, J.M. and Nourzad, F. (2004) Do lower mortgage rates mean higher housing prices? Applied Economics, 36(4), 305-313.

Mendelsohn, R., Hellerstein, D., Huguenin, M., Unsworth, R. and Brazee, R. (1992) Measuring hazardous waste damages with panel models, Journal of Environmental Economics and Management, 22(3), 259-71.

Mian, A. and Sufi, A. (2009) The consequences of mortgage credit expansion: Evidence from the U.S. mortgage default crisis, Quarterly Journal of Economics, 124(4), 1,449-1,496.

Michael, H.J., Boyle, K.J. and Bouchard, R. (1986) Water quality affects property orices: A case study of selected Maine lakes, Maine Agricultural and Forest Experiment Station, University of Maine, Miscellaneous Report 398.

Murdoch, J.C., Singh, H. and Thayer, M. (1993) The impact of natural hazards on housing values: The Loma Prieta earthquake, Real Estate Economics, 21(2), 167-184.

Quan, D.C. and Titman, S. (1999) Do real estate prices and stock prices move together? An international analysis, Real Estate Economics, 27(2), 183-207.

Raines, B. (2012) Levels of deadly bacteria more than 100 times higher in Gulf waters during the BP spill, The Mobile Press-Register (27 July), online, (, accessed on 27 July 2012.

Ridker, R.G. and Henning, J.A. (1967) The determinants of residential property values with special reference to air pollution, Review of Economics and Statistics, 49(2), 246-57.

Salter, S.P. and King, E.W. (2009) Price adjustment and liquidity in a residential real estate market with an accelerated information cascade, Journal of Real Estate Research, 31(4), 421-454.

Shelor, R.M., Anderson, D.C. and Cross, M.L. (1990) The impact of the California earthquake on real estate firms’ stock value, Journal of Real Estate Research, 5(3), 335-340.

Simons, R.A., Winson-Geideman, K. and Mikelbank, B.A. (2001) The effects of an oil pipeline rupture on single-family house prices, The Appraisal Journal, 69(4), 410-18.

Steinnes, D. N. (1992) Measuring the economic value of water quality, Annals of Regional Science, 26(2), 171-76.

Stone, D. and Ziemba, W.T. (1993) Land and stock prices in Japan, Journal of Economic Perspectives, 7(3), 149-165.

Zabel, J. and Guignet, D. (2011) A hedonic analysis of the impact of LUST sites on house prices, Unpublished Manuscript.



  • There are currently no refbacks.

ISSN: 2254-4380