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Thursday
Aug232018

Sea-Level Rise Is Universal - Fancy!

Here is a story from a couple of days ago in the Washington Post that gives meaning to the truth behind the fact that sea-level rises here are universal, including in Charleston, South Carolina where the projected rises quoted in the article appear to approximate those being experienced here.   

The article primarily relates to house values in those areas that have recent;y suffered actual or threatened flooding in the vast low-lying areas surrounding Charleston, and in the Miami-Dade County area in Florida. 

Various studies by Harvard University researchers, and from the Wharton Management School reveal conflicting results, but nevertheless, a consistent discount trend on house prices - particularly those that already been affected by flooding right down the Coast from New York to Florida with wealthier and more sophisticated buyers demanding of a sea-level rise margin. The trend has increased over the last five years, with houses at higher elevations generally appreciating faster. 

But the Wharton School (University of Pennsylvania - probably the highest ranked business school in the US, and incidentally the alma mater of Donald J. Trump!) Prof of Real Estate Susan Wachter states:

 “You could turn it around, almost,” Wachter said. “Despite all the discussion of sea level rise, and despite the tremendous increase in the number of events over the last years and the destructiveness of the events, coastal building continues and coastal property appreciation continues.”

And a Columbia University head of data science -- Jeremy Porter reports:

Home prices on the coast are “going up along with market trends. They’re just not going up as fast as other places.”

He points out paradoxically that Charleston, for example, has a hot real estate market characterized by high demand even though the city’s historic heart sits at low elevation, is surrounded on three sides by water and has recorded a rise in sea level of roughly a foot over the past century.

The really interesting aspect relating to the story, and one could suggest a fatal flaw, is the absence of any reference to the attitude of the insurance industry - surely essential information in order to obtain a full and balanced report of the situation reflected by sea-level rise on the East Coast of the US. Nevertheless, the information is interesting and instructive.

No matter what its conclusion, arguing against sea-level rise is futile, along with the inevitability of a negative effect on house prices over time. But in the meantime, precipitate and ill-thought-out action on the part of the insurance industry is counter-productive, along with external encouragement.

 

 

 

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Reader Comments (2)

From the same article - this
“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.”

And this

“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. (Using the same method, the First Street researchers found a $465 million loss in Miami-Dade County.)”

August 23, 2018 | Unregistered CommenterDenis Tegg

I posted the URL so that readers are able to understand context, but thank you for the additional extracts..

August 24, 2018 | Registered CommenterBill Barclay

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