Housing Market Capitalization of Pipeline Risk: Evidence from a Shock to Salience and Awareness

We study how house prices responded to a deadly 2010 pipeline explosion in San Bruno, California, which shocked 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 or in response to an informational letter sent to households the following year. These results suggest that home buyers are willing to pay to avoid pipeline risk when the issue has their attention, but this attention is hard to capture and is fleeting.