Despite the threat sea level rise poses to coastal communities, buyers continue to line up and pay ever-higher prices for properties located in at-risk areas. Why don’t real estate buyers take sea level rise flooding into account when they’re purchasing coastal real estate? Risa Palm, senior vice president, provost and professor of urban geography at Georgia State University, and Toby Bolsen, a political science professor at the same school, surveyed 680 Florida Realtors in 2020 to find out.
In an article published last week on The Conversation website, Palm and Bolsen shared the results of their survey. They found that buyers in general aren’t considering a property’s risk of sea level rise flooding for the following reasons:
1. Mortgage lenders and appraisers aren’t considering sea level rise risk when they evaluate a property so homebuyers aren’t paying a penalty for buying at-risk properties.
2. Wealthier buyers who pay cash can self-insure so they don’t feel the bite of higher flood insurance premiums.
3. Wealthier buyers can take the steps necessary — such as elevating property and building seawalls — to fend off sea level rise floodwaters.
4. Retired buyers are ok with enjoying coastal property for the remainder of their lives and not worrying about what sea level rise does to it after they’re gone.
Only a tiny number of the agents reported that prices were “very frequently” holding steady or falling due to the risk of flooding and that lenders were frequently denying loans to properties located in flood-prone areas. Ultimately, 70 percent of the agents said “they expect little impact on the property market in the next five to 10 years.”
Palm and Bolsen believe coastal real estate buyers are making a mistake in not taking sea level rise into account when they’re purchasing properties. They write: “Because of rising sea levels and storm risks resulting from climate change, we conclude that many of the houses currently being sold in south Florida will not outlast their 30-year mortgages without damage or expensive adaptations, and that the resale of houses vulnerable to sea level rise is very likely to become increasingly difficult.”
Hopefully, their message will be heard.
In a survey published this month, 106 climate experts predicted sea levels could rise by as much as 4.2 feet by 2100. The study, released by Nanyang Technological University in Singapore, has bad news and potential good news, depending on how successful humans are at reducing the release of greenhouse gases.
First the bad news. The experts estimate that if the burning of fossil fuels raises global temperature by 8.1 degrees Fahrenheit, sea levels could rise by 1.9 feet to 4.2 feet. The good news is that if greenhouse gas emissions are reduced to the point where the global temperature is kept at or below 3.6 degrees Fahrenheit, seas would only rise by about 1.6 feet. (Considering that real estate and critical infrastructure in many coastal areas is already being inundated by sea level rise measured in inches not feet, “good news” is a certainly a relative term.)
The wide range in sea level rise estimates is due, in part, to the challenge of predicting the rate at which ice sheets in Antarctica and Greenland will melt. Satellite observations are indicating that they’re melting at an ever accelerating rate.
Dr. Andra Garner, the study’s co-author and a professor of environmental science at Rowan University, told the Express newspaper that the survey results should help government plan for sea level rise. “This provides a great deal of hope for the future,” she said, “as well as a strong motivation to act now to avoid the more severe impacts of rising seas.”
The takeaway from this study is that property buyers, owners and real estate agents need to pay attention to the threat sea level rise poses to their communities to make informed decisions. Sea level rise flooding can affect property value, maintenance costs, taxes and insurance rates, and the mortgage market.
After months of witnessing their country battling fierce wildfires, a majority of Australian business executives who participated in a Deloitte survey worry that climate change poses a threat to their companies. Eighty-one percent of the business leaders told Deloitte that they were concerned climate change could harm their businesses.
The Australian executives’ level of concern is much higher than the global average. Forty-eight percent of business leaders in 18 other countries surveyed said they were worried about climate change.
Robert Hillard, a Deloitte Australia executive, said, “Businesses need to demonstrate to investors that they are taking appropriate steps to mitigate their exposure.”
Top Australian government officials, including Prime Minister Scott Morrison, have sparked public anger by denying climate change is a problem. Morrison says the Australian economy will be damaged if it seeks to further reduce carbon emissions. Coal, a major greenhouse gas contributor, is the country’s number two export.
The business world was rocked last week when Larry Fink, the founder of BlackRock, Inc., the world’s largest investment management corporation with nearly $7 trillion in assets under management, sent a letter to chief executives that said his firm would consider a company’s climate change record when deciding where to invest. Fink said companies needed to consider the impact of climate change and sea level rise and act accordingly to protect their bottom lines.
Buyers, sellers, owners, and real estate agents — who are essentially acting as chief executives managing their own financial futures — need to follow the business leaders’ example and consider climate change and sea level rise when they’re deciding how to proceed in a real estate transaction.