Learning to Price Climate Risk: Salience and Flood-Risk Capitalization in Spanish Housing Markets after the 2024 Flash Flood of Valencia

• Authors: José García-Montalvo
• BSE Working Paper: 1600 | October 2026
• Keywords: climate change, natural disasters, flood risk, housing prices, capitalization, risk salience, valencia
• JEL codes: Q54, R31, Q51, R21

Do housing markets price flood risk only when a disaster makes it salient? I combine 3.4 million notarial housing transactions in Spain (2007–2025) with official flood-hazard maps and use the October 2024 Valencia DANA, which killed 232 people, as a nationwide shock to the salience of long-available risk information. After the DANA, prices per square meter in 10-year flood zones fell by about 8 % relative to unexposed dwellings, even outside the affected municipalities; repeat-sales estimates imply a decrease of 4-5 %. Before the event, these zones sold at no discount. Within the affected municipalities, demand shifted toward nearby safe housing, increasing prices in those areas and decreasing housing prices in affected areas.