Sinking Property Values As Sea Level Rises

I've broached the topic of sea levels many times.  This is because I believe the rising sea level is going to get the most attention as our biosphere warms. The first indication will be what happens to ocean front property values.  It will be like being in a pot of cool water being brought to a boil, it's hard to tell how bad it's getting.

By comparing properties that are virtually the same but for their exposure to the seas, researchers at the University of Colorado at Boulder and Pennsylvania State University found that vulnerable homes sold for 6.6 percent less than unexposed homes. The most vulnerable properties — those that stand to be flooded after seas rise by just one foot ­— were selling at a 14.7 percent discount, according to the study, which is set to be published in the Journal of Financial Economics.

 The temperature is slowing increasing, and Charleston, South Carolina is starting to feel it.

Elizabeth Boineau’s 1939 Colonial sits a block and a half from the Ashley River in a sought-after neighborhood of ancient live oaks, charming gardens and historic homes. A year ago, she thought she could sell it for nearly $1 million. But after dropping the price 11 times, Boineau has decided to tear it down.

In March, the city’s Board of Architectural Review approved the demolition — a decision not taken lightly in Charleston’s historic district.

“Each time that I was just finishing up paying off the bills, another flood would hit,” Boineau said.

Elizabeth Boineau stands on her dock at Edisto Island in South Carolina on Aug. 13. Flooding damaged her home in Charleston’s historic district and has threatened her property value. (Hunter McRae for The Washington Post)

Ms. Boineau is feeling it

Boineau lives in Harleston Village, one of the neighborhoods that has been hardest hit. In October 2015, flooding on the Ashley River damaged gardens and homes after an extreme rain event dropped about 20 inches on the city. Not a month later, an 8.7-foot tide flooded the neighborhood again.

On a broad scale, the effect is subtle, the studies show. The sea has risen about eight inches since 1900, and the pace is accelerating, with three inches accumulating since 1993, according to a comprehensive federal climate report released last year. Scientists predict the oceans will rise an additional three to seven inches by 2030, and as much as 4.3 feet by 2100.

and everyone else in Charleston,

Last month, the nonprofit First Street Foundation released the first analysis to single out Charleston, a gracious port city founded in 1670. The analysis suggests that exposed homes in Charleston have lost $266 million in value since 2005 because of coastal flooding and expectations of still higher seas.

Not just in Charleston.  Miami too

The most-studied market has been Miami-Dade County, parts of which have for years been experiencing regular sunny-day flooding. In a separate paper published in April, researchers at Harvard University found that properties at higher elevations were appreciating faster than properties at lower elevations, a phenomenon they dubbed “climate gentrification.”

Not everybody is realizing what is going on

The study found the drop in prices appears to be driven primarily by investors buying multiple properties or second homes. Such buyers tend to be wealthier and better educated than owners who occupy their coastal homes, said Ryan Lewis, an assistant professor of finance at the University of Colorado and a co-author of the study.

“Sophisticated buyers . . . demand a discount to bear the risk of future sea level rise,” Lewis said in an email.

South Carolina is just beginning to appear on the global warming radar

Harvard’s Jesse Keenan, who worked on the climate gentrification study, said the research is “an emerging area” that has produced uneven results. For instance, the Colorado-Penn State study found lower property values along the U.S. coast as a whole and in several states, including New York, New Jersey, Florida and Massachusetts. But it did not detect a change in South Carolina.

It turns out, though,

[B]eachfront property is not necessarily declining in value. Rather, the studies suggest that more-exposed properties — including properties that have not yet experienced direct flooding — simply are not appreciating as rapidly as their inland neighbors.

We'll see how long that prevails as the sea levels rise.