The study finds considerable evidence of climate gentrification, and for the elevation hypothesis in particular. Properties at high elevations have experienced rising values, while those at lower elevations have declined in value. In fact, elevation had a positive effect on price appreciation in more than three-quarters of the properties and 24 of the 25 separate jurisdictions the authors examined. The study also found support for a secondary hypothesis, the “nuisance hypothesis,” which posits that price appreciation in lower-elevation places had not kept up with higher-elevation places since approximately 2000 due to nuisance flooding.
Generally speaking, the areas that had the strongest regression coefficients—that is, the places where elevation best predicted the change in real estate prices — are all along the coast and at the highest risk of flooding. They include Key Biscayne, Miami Beach, and a number of exclusive island enclaves, as well as Sunny Islands and Golden Beach to the north.
But these positive associations spanned land-locked communities as well as coastal ones. In fact, more than half of the jurisdictions with positive correlations —13 out of 24 — were landlocked. All of these have significant water exposure in the form of lakes and drainage canals. The largest jurisdiction in the sample, unincorporated Miami-Dade County, showed the lowest, but still positive, correlation.
I have no idea if projections for rising sea levels will in fact come to pass. However, there is enough of commentary about this subject right now that it is worth considering from the perspective of how fears of rising sea levels might affect behaviour. If this is taken in conjunction with estimates that hurricanes may become more powerful as a result of warming sea temperatures then that would be a contributing factor in changing sentiment towards property.
One of the points raised by Allen Brooks in Musings from the Oil Patch which I posted yesterday is that municipal debt is obviously going to be a troublesome asset class in the event that large areas are in fact made uninhabitable by rising sea levels. That seems like a distant prospect today but the reality is that many districts are in parlous financial situations already and they may welcome the opportunity to claim force majeure in the event of inundation.Back to top