The Ocean Is Coming for Homes. That's Not Priced In.

[marmar]

(Bloomberg Opinion) -- The rise in sea levels is on track to increase highly destructive flooding fivefold in the U.S. by 2050, but a new study of home prices in coastal Florida suggests buyers are oblivious or indifferent to the risk. Governments need to take action to ensure that everyone has the right information about this critical threat.

Freddie Mac researchers led by Ajita Atreya found that homes directly exposed to projected sea-level rise command no discount over those that aren’t. There were discounts for homes in designated flood plains, but that’s probably to offset the cost of flood insurance they must carry if financed with a government-backed mortgage rather than future sea-level risk. The findings hold true for investment properties in addition to those bought as primary residences.

In all, the market’s willingness to look past sea-level risk amounts to a dangerous oversight. About 40% of the U.S. population lives in coastal counties, according to the National Oceanic and Atmospheric Administration, and NOAA researchers now project an average of 10 to 12 inches of sea-level rise by 2050, even if the world manages to cut greenhouse gas emissions before then.

Yet many buyers are clearly lacking important information. Florida and many other states don’t even require sellers to disclose past floods, let alone tell buyers that a home faces sea-rise risk. In a ranking from the National Resources Defense Council’s website, Florida is among 21 states that receive an “F” in flood disclosure, meaning there’s no statutory or regulatory requirement for flood disclosure at the the time of sale. Even in the states that require disclosure, they often come at the 11th hour, when buyers are signing stacks of closing documents, according to Michael Gerrard, director of the Sabin Center for Climate Change Law at Columbia Law School. Renters typically get fewer protections than buyers.

Read more at: https://www.bloombergquint.com/gadfly/the-ocean-is-coming-for-homes-that-s-not-priced-in
Copyright © BloombergQuint

[GPV]

1. People always want to make their investment back, plus some. So no, this devaluation will not be

taken seriously.

[BigmanPigman]

2. "researchers now project an average of 10 to 12 inches of sea-level rise by 2050"

That is a lot more than I expected.

[hunter]

3. It's a game of hot potato. Whoever is holding the property when the ocean takes it loses.

Until then party on like there's no tomorrow.

[fierywoman]

4. Is Mar al Lago basically at sea level?

[Hekate]

5. El Caudillo del Mar a Lago only cares about his own lifetime

Après moi, le déluge — rather literally.

[fierywoman]

10. ----

[NickB79]

6. One day, one of the big insurers will finally take notice

And raise insurance costs dramatically. The other insurers will rapidly follow suit. Anyone that doesn't will go bankrupt paying out on damages. States will try to subsidize insurance for a time, but they'll fail.

And all of a sudden, we'll see a housing market collapse the likes of which we haven't ever seen. Millions suddenly left with houses that are unsellable. Houses that were their life savings.

We're already seeing this in California, with wildfires making homes unsellable.

https://www.marketplace.org/2020/08/31/insurance-increasingly-unaffordable-as-climate-change-brings-more-disasters/

[alphafemale]

7. Couldn't insurance companies just refuse to write policies?

At least for certain areas?

I can see the risk for loss being more than they want to assume, and therefore they say "No."

[applegrove]

8. I can't wat the home decor shows where they sell beachfront

properties because the people will not get their investment back. I always want to yell at the TV.

[WarGamer]

9. and yet...

New $10M+ houses keep springing up from Marco Island to Miami... a whole 2' above sea level

[smirkymonkey]

12. I don't understand these people.

Unless they are very old and hate their children and grandchildren or very stupid.

[pecosbob]

11. The price keeps coming out of our pockets as taxpayers

We socialize the cost when wealthy people lose money.