Wildfires, hurricanes, and other diverse effects of global climate change have become increasingly common during the past decade. Symptoms that are particularly worrisome to the real estate industry are rising sea levels and the risk of flooding they cause. Here we describe the impacts that a climate change and a subsequently warming planet has on buyers, owners, and the properties whose future is in question.
Researchers at the University of Pennsylvania reported that between 2013 and 2018, property sales in flood-prone areas declined from 16% to 20%, suggesting a decreased interest in coastal real estate. Furthermore, this reduction was due to a lack of desire rather than an inability to find a lender, because mortgage companies were just as willing to provide loans during this time.
Some realtors have put their hope in investors representing the 19% of U.S. citizens who view the phenomenon of climate change with skepticism. This statistic represents those who believe global warming to be hoax, as well as those who attribute it to non-human causes. Unfortunately, however, the number of people in this demographic is not significant enough to keep real estate markets afloat in flood-prone areas.
With fewer people looking to purchase homes near the ocean, property values have been steadily plummeting. Coastal homeowners have been dismayed to see not just the value of their houses going down, but also to face a declining personal net worth that negatively affects their ability to secure loans. The fall of prices beginning in 2015 has caused some experts to compare the situation to the housing crisis that occurred in 2008.
One warning commonly given by climate scientists is that global warming will widen the already large gap between the wealthiest and the poorest Americans. The University of Pennsylvania report confirmed this prediction, showing that higher poverty rates in a community were associated with larger reductions in property values than in those experienced in wealthier neighborhoods, even when both areas were equally flood-prone.
Are the responses of buyers and owners justified? Most evidence indicates they are. Twenty-two of the top 25 cities most at risk for flooding are within Florida. On this list, the other three cities are New York City, Charleston, SC, and Atlantic City, NJ, with New York City ranked number one. Homes in Hawaii, where sea level now rises by one-quarter inch per year, are also in peril.
The situation does not appear to be getting any better. One report estimates that if industrialized nations do not curb their carbon emissions, an additional 3.4 million homes will face an increased risk of flooding by 2100. Much is at stake as the U.S. re-enters the Paris Climate Agreement and imposes regulations on the emission of greenhouse gasses.
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