Location, Location, Location – Real Estate and climate change
As the old saying goes, the three most important things to know about real estate is location, location, location. That adage has been ever more proven true by the effects of climate change.
Recent articles discussing the effects of climate change on real estate, state that super-storms have “gentrified” coastal cities by pricing out lower income families. This has occurred for multiple reasons: builders have replaced $200,000 to $300,000 homes with larger $500,000 to $750,000 homes (more profitable), higher costs to insure properties closer to the water that are more susceptible to flooding, and increased taxes to pay for storm mitigation efforts (new levees or higher breakwaters and dikes).
Shoreline properties in south Florida have been affected by climate change, with prices for properties on the water have been selling at a discount to properties at higher elevations farther inland. Not only are high rent and high value properties at risk, so are thousands of historic sites along the Florida coast. Fort Jefferson, Fort Pickens, and Fort Zachary Taylor are only three of Florida’s heritage sites that are likely casualties of rising sea levels.
Florida isn’t the only state affected by rising sea levels, super storms, and extreme weather. All along the Gulf coast, from Texas to the Florida Keys, there is evidence of storm ravaged areas replacing lower cost housing with higher priced real estate. The proof is in the increase of median household incomes, years after the storms have struck.
What will be the logical end of these trends as they continue to occur over time? Will all coastlines end up like Martha’s Vineyard, where gentrification has gone to an extreme end of the scale? Or will there come a time when even rich people can’t afford the risk of living at the beach?