Living near the water has traditionally been a pleasant dream for home-buyers, but research from a nonprofit group evaluating the impact of rising sea levels indicates home values may be suffering as buyers start avoiding the water. First Street Foundation (FSF) is a group based around the cause of advocating for solutions to rising sea levels. Their scientists found three Northeastern states have experienced as much damage as the Southeast when it comes to flooding.
Estimates of lost potential home value appreciation for Southeastern states including Florida, Georgia, North Carolina, South Carolina, and Virginia top $7.4 billion. However, a new study from FSF indicates this number may be nearly matched by three Northeastern states: New York, New Jersey, and Connecticut. Ocean City, New Jersey, ranks highest in property appreciation losses in the study, with a cumulative loss of $530 million. By comparison, Miami Beach posted potential losses of $337 million.
Plans to Protect Real Estate Values
This is not to say that home values are not rising in many of the markets FSF is studying. As developers learn more about potential threats associated with proximity to the ocean, they employ strategies to protect properties. Such strategies include elevating homes, raising the street level of the city, and upgrading drainage systems.
In addition to extreme weather events, problems also arise from regular erosion result from rising tides. For example, in Nantucket, Massachusetts, some areas have lost nearly 100 feet of beachfront, placing seaside homes built close to the water at significant risk for water damage. As buyers become more aware of the risks, home values may lag.
Researchers from the University of Colorado at Boulder and Pennsylvania State University have studied this trend. Their research shows homes near rising sea levels sell at about a seven percent discount compared to less risky properties.