An anthrax attack centered on downtown Seattle could cripple the region’s real estate market, causing housing prices to plunge 33 percent and resulting in 70,000 residential foreclosures, according to the results of a new study.
Published in the journal Risk Analysis, the study is the first to analyze how an insidious terrorist attack — one that employs radiological, biological or chemical agents — would impact the real estate market of a major city.
The study’s authors said the impact of the 2008 housing crash and foreclosure crisis underscores the importance of researching how a terrorist attack may impact a region’s housing market.
“It can be the domino that starts the chain reaction in terms of an economic downtown. You have the possibility of a big black hole in the middle of a major city,” said study co-author Adam Rose, research professor at the USC Price School of Public Policy and coordinator for economics at USC’s National Center for Risk and Economic Analysis of Terrorism Events (CREATE).
The study relied on one of 15 planning scenarios — the release of airborne anthrax spores in a city center — identified by the U.S. Department of Homeland Security in an effort to focus anti-terrorism spending nationwide.
The findings mean that such an attack could prompt a mass exodus of 200,000 people from Seattle, resulting in a large number of displaced persons similar to the aftermath of Hurricane Katrina, according to Rose.
“These types of biological or chemical attacks are something people have no experience with. They scare people because the threat can linger,” said Rose, who has published economic estimates of the 9/11 attacks, the 1994 Northridge earthquake and other major disasters. “Establishing effective risk communication about the initial threat and progress toward decontamination would be very helpful to help people overcome their fears. This would mute some of the decline in real estate prices.”
Co-authors of the study were Noah Dormady, assistant professor in the John Glenn School of Public Affairs at The Ohio State University; and Thomas Szelazek, GIS and economic analyst with Point C Partners and RideAmigos Corp. in Pasadena, Calif.
The study was funded by the Department of Homeland Security through CREATE.