Rising seas are eroding coastal property values
Accelerating sea level rise will erode not only beaches but also coastal property values leading to a crash in the real estate market. Houses will be both literally and figuratively under water. That’s the inevitable conclusion co-author Keith Pilkey and I reached during the year in which we lived sea level rise every day while writing our recently published book “Sea Level Rise: A Slow Tsunami on America’s Shores.”
The First Street Foundation, a non-profit research group concerned with flood risk, analyzed 13.3 million real estate transactions, and compared the results to 25.6 million properties along the East and Gulf coasts of the US. They concluded that there was a $15.8 billion loss in home value appreciation between Maine and Texas from 2005 to 2017. That is, property values in areas projected to be subjected to sunny day flooding within a decade or so are increasing more slowly than other less-threatened coastal properties. According to this peer reviewed study, 81,900 homes lost value in coastal North Carolina which amounts to a paper loss of $582 million. Hot spots in North Carolina include the Outer Banks and Topsail Island. Not surprising, Florida has experienced the greatest loss of $5.4 billion.
The study found that the decreased property values are mainly a response to sunny day flooding — the tidal flooding of low-lying areas during exceptionally high tides. The highest of these tides, known as king tides, occur when the moon is closest to the earth. These high tides have always occurred but the waters are now higher than ever because of sea level rise.
Why should a few inches of temporary water ponding have such an impact on property prices? To understand this problem, imagine you are living in a house where the neighboring streets are temporarily flooded with salt water from time to time. What does that do to road grates and metal parts of cars and bicycles? What does it do to normal routes to schools, work, and hospitals, and how often does it cause sewer overflows and disrupt drainage systems? Also, seeing the water repeatedly blanketing your street drives home the fact that the seas are rising and that your home and your neighborhood are at certain risk for permanent inundation.
The First Street Foundation’s conclusions should be a wake-up call to all communities subjected to sunny day flooding. Of course, the floodwater will deepen with time until the flood eventually becomes permanent. Well before that happens, property values will certainly crash. In the 1960s, Wilmington, North Carolina, saw just two sunny day flood events per year. In 2015, Wilmington experienced 48 flooding events hit. And Wilmington is not alone. Tidal flooding is increasing up and down the east coast of the US.
It isn’t just sunny day flooding that is causing property values along the coast to appreciate more slowly than non-coastal properties. People are increasingly more aware that climate change is a reality and that the nature of coastal storms are changing. Storms are less predictable, more severe and are dropping more rain than has happened in the past.
Once the inevitable crash comes, be it in two years or a decade, the already diminished retirement wealth of thousands of people will disappear, wealth that was planned to augment retirement income.
Individual families will have to decide their response to the First Street Foundation study. I know that if my family were living in or near a sunny day flooding area, I would urge them to sell and leave. To sell, of course, they would have to find the “greater fool”. When the greater fools disappear, the crash is a certainty.
Is there a possible community response to delay the disaster the crash will bring? Move or demolish threatened buildings leaving unoccupied strips of land to absorb floodwaters? Fortify urban shorelines? Community planning for the crash should be going on now. On the state level we should not add to the problem by promoting new development with roads and bridges on our barrier coast.