A report released by McKinsey & Company, a global management consulting firm, predicts that Florida homes exposed to sea level rise flooding and storm surge from stronger hurricanes — fueled by a warmer atmosphere and ocean water — could lose 15-to-35% of their value by 2050. That translates into $30 billion to $80 billion worth of devaluation.
The company, which studied past trends to arrive at the estimate, says if not effectively addressed, flooding could result in lenders no longer offering 30-year mortgages in affected areas. Furthermore real estate owners could get hit with higher insurance premiums and possibly lose access to insurance altogether if providers leave the market.
If the coastal real estate market faces a downturn due to sea level rise flooding, the report says there’s also a concern that property tax revenues will be reduced, leaving communities with less funding to address the problem.
The report’s authors warn that their estimates may be on the conservative side. Losses could be much higher if water, sewage and transportation systems are flooded or buyers become much more sensitive to climate risk when purchasing properties.
The researchers say Florida is going to have to make hard choices to address sea level rise flooding. The state will have to decide whether to protect the coasts with seawalls and other methods or abandon risk-prone areas.
To protect their financial futures, real estate owners everywhere need to pay close attention to how federal, state and local governments plan to protect their communities from the threat of sea level rise flooding.