Bloomberg: South Florida’s Real Estate Reckoning Could Be Closer Than You Think

Last week, I posted scientific findings regarding increased “sunny day” tidal flooding in U.S. coastal cities and its linkage to global sea level rise due to melting ice in Greenland and Antarctica. I went on to argue that the frequent assertion by our president and others, that increased investment in the fossil fuel industry creates jobs and has other economic benefits, ignores the devastating and surely greater economic costs that will occur if we continue to ignore climate change. Among those costs is the massive quantity of high-priced U.S. coastal real estate that will ultimately be immersed in the ocean if we continue with “business as usual.”

Since then, I read this very recent Bloomberg article on the subject, which I recommend.

Bloomberg Article

As it turns out, though much of our government is in denial about the economic realities of climate change, that denial is vanishing in the Florida real estate market. Both social scientists and real estate business insiders can measure the effect of this growing realization on coastal real estate prices in South Florida, a test case for highly valued coastal properties that ring the nation:

Figure 2 from this social science working paper, referenced in the Bloomberg article, by researchers at the University of Colorado at Boulder and Pennsylvania State University. “Displays the proportion of exposed transactions in coastal counties within the continental United States. Exposure is measured as an indicator variable that takes a value of 1 if a property will be affected by 0-6 feet of sea level rise.”

Some highlights from the Bloomberg article and a social science working paper it cites:

“At some point, we won’t be able to sell.”
-Ross Hancock, homeowner in Biscayne Bay, FL, who faces a potential $60,000 repair bill for Irma damages to his condo not covered by insurance, and who has been trying for 2 months to sell it without success

“systemic fraudulent nondisclosure [of flood risk by real estate agents] … is pretty much what we have now.”
-Albert Slap, owner of Coastal Risk Consulting, a South Florida flood risk assessment company
(The U.S. House of Representatives passed a bill in 2017 that would require agents to disclose flood risks, but the Senate has not taken it up.)

“They’re not going to live here while we spend two years raising the streets.”
-Dan Kipnis, Miami Beach homeowner who has been trying unsuccessfully to sell his house for 18 months despite dropping the price by a more than one-third from $3.2 million, worrying that sea-level related projects and the associated property taxes are scaring prospective buyers away

“Homes exposed to sea level rise (SLR) sell at a 7% discount relative to observably equivalent unexposed properties equidistant from the beach. This discount has grown over time and is driven by sophisticated buyers and communities worried about global warming.”
-Asaf Bernstein, Matthew Gustafson & Ryan Lewis, authors of the cited social science working paper, summarizing their conclusions from a recent detailed study of the relationship between SLR exposure and U.S. coastal real estate prices

#AskYourDenierIf TheyveSeenThis


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