When it comes to sea level rise mitigation efforts, buyers’, sellers’ and real estate agents’ interests are often in conflict.
Buyers need access to accurate information regarding the threat sea level rise flooding poses to a property of interest and the community in which it’s located. Sellers don’t necessarily benefit when buyers have access to this information because it can cause their property values to drop. And real estate agents want a dynamic market that delivers commissions, which isn’t guaranteed in an at-risk community. Clearly, when sea level rise flooding is present or poses an immediate threat to a property, neighborhood or entire coastal community, all three interests can’t be served.
Alix Spiegel, a producer for Chicago Public Media’s This American Life, recenlty explored these conflicting interests in the city of Pacifica, California. Her report, titled Apocalypse Now-ish, describes how sea level rise has amplified wave action against the city’s sandy cliffs, causing the loss of at least 31 homes and three apartment buildings to date. With the cliffs continuing to collapse, many more homes are at risk in what Spiegel described as “A surreal horror movie in extremely slow motion.”
In 2018, the California Coastal Commission asked coastal communities to study the threat sea level rise flooding posed to them and describe what they planned to do about it. The options included elevating houses, building seawalls, and managed retreat. The last option, managed retreat — in which the government purchases homes under threat and usually demolishes them because it’s cheaper than repeatedly rebuilding them and providing road maintenance and utilities — set off a firestorm in Pacifica.
According to Spiegel’s report, the public was extra agitated by misinformation from a Realtor’s organization that told them the state would require homeowners to pay to destroy their homes and have the rubble removed. The producer makes it clear that it’s against state law to require this. A Realtor spokeswoman stands by the misinformation, however, claiming there’s no way the state will have enough money to purchase all the homes at risk in Pacifica and other communities experiencing sea level rise flooding.
Ultimately, the conflict comes to a head when Pacifica replaces a mayor Spiegel says isn’t a “firebrand” for managed retreat with one who opposes it. Under the new mayor’s leadership, the city removes mention of hazard areas and states its opposition to managed retreat in the report filed with the California Coastal Commission.
Property buyouts under managed retreat plans have taken place for years in many coastal states and are actually accelerating as sea level continues to rise. They’re most common in areas that have experienced a natural disaster that destroys property and puts the next line of structures at risk.
This American Life’s report clearly illustrates the conflict between buyers, sellers and real estate agents. There is no easy way to resolve it.
When making what’s typically the most expensive purchase of their lives, buyers clearly need to know if a property of interest is in a hazard area at-risk for sea level rise damage. When that information is not available, they may unwittingly overpay for a property that’s under threat of destruction or that may suffer depreciation in value because it’s in or near a threatened area. To avoid this negative outcome, buyers need to make sure they research how sea level rise is impacting a property of interest, neighborhood or community. Seller’s disclosure laws vary greatly from state to state so relying solely on them is a big mistake.
Sellers, on the other hand, have a valid point when they complain that the mere mention of that their property is in a hazard area or could be subject to managed retreat will hurt their property value. The challenge for them is that unless their property is experiencing sea level rise flooding or in close proximity to it, they don’t always know exactly when it will impact their property value. Here, too, smart sellers need to keep up-to-date on the latest sea level rise developments in their communities and consider selling before it impacts their property values. They also need to know how their government plans to cope with sea level rise flooding as taxes and insurance rates could spike. There’s also the danger that insurers and mortgage providers will one day stop offering their services to their neighborhood which will make selling their property nearly impossible.
Realtors (not all real estate agents are Realtors) are walking a real tight-rope on this issue. Their code of ethics requires them “to treat all parties honestly”. How they’ll be able to do this if, as in Pacifica, they don’t want buyers to know that structural engineers determined a home is located in a neighborhood that’s designated as a special hazard area that could lead to properties being damaged or losing value due to sea level rise doesn’t quite live up to the ideal. They clearly shouldn’t be in the business of pressuring coastal cities and towns to sweep sea level rise facts under the rug, which gives buyers and sellers a false sense of confidence that a property of interest is safe from the threats posed by sea level rise.
The take-away in all of this: With hundreds of thousands of homes and buildings worth billions of dollars at risk of sea level rise flooding between now and the end of this century, buyers and sellers have to conduct due diligence to protect their financial futures when they’re involved in real estate located in coastal communities.