When risk does not discount: Flood history and rising property valuations

We study how expanded flood disclosure requirements affect real estate markets and appraisals in South Carolina. Counterintuitively, more comprehensive flood disclosures cause home prices to increase in tracts with a history of significant flooding. To support these higher postdisclosure valuations, appraisers reduce negative language, select more comparable properties outside flood zones, and apply smaller adjustments to comparable sales. Experienced appraisers are more likely to underappraise properties, yet appraisal values still match or exceed contract prices 89.2% of the time. These findings highlight the unintended consequences of real estate regulation for market behavior and appraisal practices.