If last year’s hurricane season was any indication, climate change could increase risks associated with owning a home, according to a study by University of Miami. The study says that sea-level rise will diminish the value, desirability and even the habitability of some of South Florida’s most coveted real estate.
According to an article on the website of WLRN, a public radio and television network for South Florida, that covered a public climate change symposium based on this study, “The ocean here could rise a foot or more in the next 30 years—the amount of time in a mortgage cycle—according to University of Miami Professor Harold Wanless and other researchers. That means if you buy a house today, and rising seas put your house at risk for flooding, your property value might decrease, but your mortgage payments won’t.”
Citing a TED Talk by former Vice President Al Gore, the study said that Miami was among the 10 most populous cities in the world most vulnerable to rising seas, but also had the most to lose: more than $3.66 trillion in assets.
According to Eugene W. Anderson, Dean of the University of Miami’s School of Business Administration, who also contributed to the study, “Rising seas present serious economic issues. With many billions of dollars worth of low-lying real estate at stake, the economic impact would be severe if insurance and financial markets recognize an emerging threat. The resulting spike in insurance and interest rates would make current real estate prices unsustainable. Property values and tax bases would fall, making it harder for affected communities to adapt.”
We have already seen a glimpse of climate change on real estate during the hurricane season last year. The temporary rise in early-stage delinquencies in September 2017 reflected the impact of the hurricanes in Texas, Florida, and Puerto Rico. However early-stage mortgage delinquency rates averaged around 5 percent in Florida cities such as Miami, Orlando, Tampa, Naples, and Cape Coral.