The effect of floodplain designation on the residential real estate market in two communities, Elmira, NY and Wilkes-Barre, PA, is presented. Discriminant analysis differentiates between floodplain and nonfloodplain housing, using as independent variables characteristics of the houses sold. Several varibles define submarkets, but they vary between the communities. Only selling price and lot size were significant for both communities. Distinct floodplain and nonfloodplain housing markets can be differentiated. This allows for isolation of socioeconomic and environmental variables that may contribute to the recovery of housing values following flooding or to the implementation of land use controls associated with floodplain designation.