Sweating Assets: The Effect of Extreme Heat on the Housing Market

This paper studies the impact of extreme heat on the housing market in 26 Chinese cities by analyzing more than 1.5 million second‐hand housing transaction records. Empirical results from hedonic regressions show that extreme heat significantly decreases housing prices and transaction volumes. This negative effect is concentrated in warm seasons and is substantially stronger for high‐end apartments, top‐floor units, and units in high‐rise buildings. Green spaces and water bodies are effective in mitigating the negative effect of extreme heat on the housing market. Mechanism analysis demonstrates that extreme heat significantly decreases the number of on‐site property visits before a transaction. These findings underscore the important influence of climate change on the housing market.