Global Consultant Recommends Steps to Protect Florida Real Estate Value from Sea Level Rise Flooding

McKinsey & Company, a global consulting firm, released a report this week that analyzes the risk sea level rise flooding poses to billions of dollars worth of Florida’s residential real estate and recommends steps that could be taken to mitigate the damage.

The report, titled “Will mortgages and markets stay afloat in Florida?”, starts by stating the simple fact that Florida’s unique location — in a hurricane-prone zone — and geology — extra low elevation with a porous limestone foundation that allows sea water to move freely — makes it very susceptible to sea level rise flooding. In fact, the authors cite a First Street Foundation study that concluded sea level rise will increase the number of days that many coastal areas experience tidal flooding each year from a few days today to 200 days a year by 2050. In addition, the average annual damages from storm surges will itself surge from $2 billion today to up to $4.5 billion by the middle of this century.

The report goes on to discuss how sea level rise is already depressing home values in areas that experience sea level rise flooding compared with those that don’t. “About 25,000 homes in Florida already experience flooding at frequencies of more than 50 times per year (almost once a week on average),” according to the report. “With rising sea levels, 40,000 coastal properties representing $15 billion of value could run this risk by 2030, and 100,000 properties worth $50 billion by 2050.”

The threat to the value of Florida’s residential real estate isn’t posed only by direct flooding, either. The report says as buyers are increasingly made aware of the flooding and the expenses involved in owning a property in a flood zone, prices will likely drop. Buyers could also balk at the higher insurance premiums and taxes that are sure to be levied as a result of flooding. A final point of pressure is the mortgage market. With the risk of flooding increasing every year, experts are wondering how long mortgage providers be willing to write 30-year-mortgages — or even 15 year mortgages, for that matter — for high risk properties when the owners might never pay back the loans.

The report authors offer a few potential solutions that could help mitigate the risk. Among their recommendations are that: 1. Real estate markets become more transparent about the risk of sea level rise flooding, so buyers don’t lose confidence in the market; 2. More money be spent on projects needed to upgrade the infrastructure — such as sea walls and storm sewers — needed to fend off the flooding ; and 3. Policy makers, engineers, investors and community organizations band together in groups to decide which properties to protect from sea level rise flooding and which to abandon.

In the end, the authors write that “While the state and communities face hard choices in the face of rising sea levels and worsening hazards, planning today can help manage the consequences and minimize the costs of climate change in the future.”

It’s clear from this report that the day of reckoning is here for buyers, sellers, owners and real estate agents in coastal communities. Understanding the roles played by individual property owners, governments, insurers and mortgage providers in the health of a real estate market impacted by sea level rise flooding is critical to protect your financial future.

Author: Larry Richardson

Thank you for visiting my website! I'm an experienced and licensed drone pilot, photographer, videographer, real estate agent (voluntarily inactive), journalist and social media influencer. At my visual media company, Delray Dynamic Arts, LLC, I've used my skills to shoot stills and videos for real estate agents, private property owners, and a company that specializes in artistic holiday light displays. As The Step by Step Chef, I've published cookbooks and created hundreds of cooking videos for my StepByStepChef.com website that have attracted over 14 million views. I'm an honors graduate of the University of Southern California's School of Journalism with years of experience in marketing, advertising, public relations and public affairs. I look forward to putting my knowledge and experience to work for you!

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