The Price of Transparency: Housing Market Responses to Flood Risk Disclosure Laws in South Carolina.

Abstract

As climate change increases the frequency of flooding, housing markets are becoming increasingly exposed to this environmental risk. Flood risk disclosure laws are designed to improve transparency by requiring sellers to provide information about a property’s flood exposure during transactions. My paper examines the effects of the 2023 expansion of South Carolina’s flood disclosure laws on housing prices. While the basic model shows no statistically significant price change for high-risk areas overall, properties that are located in the most flood-exposed zip codes experienced a 5.6% higher price growth following the reform. When the analysis is separated by flood type, the strongest effects appear for coastal flooding. Additional regressions examining bottom-tier and top-tier housing markets suggest that the effects of flood risk disclosure vary across the housing price distribution. These findings suggest that increasing transparency via disclosure laws does not necessarily lead to immediate price declines in environmentally exposed housing markets, as could be expected.