The Price and Distributional Impact of Flood Risk Disclosure: Evidence from US Housing Platforms

How does information disclosure reshape the allocation of environmental risk in the housing market? We quantify the price and distributional impact of the nationwide disclosure of property-level flood risk from First Street on U.S. housing platforms. Using a difference-in-RD design that exploits discrete cutoffs in the disclosed risk categories, we find that homes labeled as "extreme'' flood risk experience a 3.3% price discount and stay on the market for a week longer, relative to those labeled as "severe'' risk. These effects are strongest for coastal properties and remain pervasive across different FEMA floodplain designations. Disclosure also generates significant household resorting: buyers of extreme-risk homes have 5.3% lower income, are more likely to use FHA financing, and are older. Through a discrete choice model, we find that the redistribution of risk to lower-income households is primarily driven by price changes rather than heterogeneous preferences for flood risk.