Working Papers
Flood Risk, Market Segmentation, and the Impact of Disclosure on Housing Prices (Job Market Paper)
Two main forces are believed to be behind the incomplete capitalization of flood risk in the U.S. housing market: preference driven sorting and information frictions. This paper studies the latter by utilizing South Carolina’s 2013 statewide flood disclosure reform which required sellers to disclose flood risk information before buyers submitted offers, shifting standardized risk information from the underwriting or closing stage to the pre-offer price formation stage. Using a transaction-level single-family home sales dataset linked to parcel-level flood-risk, I find that mandatory disclosure reduced the relative price of floodplain properties by approximately 7 percent and steepened how parcel-level flood risk is priced within the floodplain. Transaction-timed disclosure improves risk capitalization overall, particularly in coastal markets where risks are high and in lower- and middle-income census tracts where information frictions may be more binding and where flood-related costs represent a heavier burden on household budgets.
Flood Risk, Market Segmentation, and the Impact of Disclosure on Housing Prices (Working Paper)
Flood risk capitalization was stable from 2000–2019 but reversed sign during 2020–2021, coinciding with the COVID-19 housing boom and reduced buyer due diligence. Using nationwide CoreLogic transactions linked to First Street parcel-level flood risk scores, I show that states with mandatory flood disclosure requirements exhibited significantly more stable risk pricing throughout the pandemic than non-disclosure states. The findings suggest that standardized disclosure can act as a structural safeguard for climate risk pricing during periods of market frenzy.
