Sea level rise may seem like a far-off threat, but a growing number of new studies, including one out Thursday, shows that real estate markets have already started responding to increased flooding risks by reducing prices of vulnerable homes.
The bottom line: According to a new report by the nonprofit First Street Foundation, housing values in New York, New Jersey and Connecticut dropped $6.7 billion from 2005 to 2017 due to flooding related to sea level rise. Combined with their prior analysis of 5 southeastern coastal states with $7.4 billion in lost home value, the total loss in 8 states since 2005 has been $14.1 billion.
What they did: First Street's Steven A. McAlpine and Columbia University's Jeremy R. Porter analyzed more than 9.2 million real estate transactions, encompassing about 20 million properties in New York, New Jersey, Connecticut, Florida, Georgia, South Carolina, North Carolina and Virginia.
First Street also released a new tool called Flood iQ, which allows people to look up individual properties to see how their values are influenced by flooding. Hotspots for flooding and lost value emerge, including neighborhoods in Charleston, S.C., parts of New Jersey and the Norfolk area, where the main access road to the largest naval base in the world has been seeing frequent tidal flooding.
- “The water is coming up on the streets on a very regular basis [in Norfolk]," McAlpine says. “These homeowners are extremely exposed to it now."
- "We can harden cities and allow them to thrive on the coast,” he adds. But, if we don't take sea level rise and tidal flooding into account, "the problem is only going to get worse.”
Andrea Dutton, climate scientist at the University of Florida in Gainesville who was not part of this study, says:
"You’ll have to forgive me if I’m not surprised that coastal real estate values are dropping due to not just the threat of future sea level rise, but the impacts that are already being felt."
The big picture: The new report comes as other studies are starting to hone in on the present-day changes in value of vulnerable homes, rather than just projections. For example, research to be published in the Journal of Financial Economics shows that homes exposed to sea level rise already sell for about 7% less than identical homes — with the same number of bedrooms, property and owner type — unexposed to flooding.
Go deeper: Read the rest of the story here.