Climate Change Hits Property Prices

Authored by Bilal Hafeez via MacroHive,com,

One of the clearest effects of climate change is sea level rise (SLR). The scientific community expects a global average SLR of around 3-6 ft. over the next century. This could affect over 6 million American homes and put one trillion dollars of coastal US real estate at risk. A new paper, Disaster on the Horizon: The Price Effect of Sea Level Rise, by Asaf Bernstein, Matthew Gustafon, and Ryan Lewis finds that exposed properties are starting to sell at a discount.

The Data

The academics combine Zillow US residential data with the National Oceanic and Atmospheric Administration’s (NOAA’s) SLR calculator to identify each property’s exposure to SLR. They have over 1.7 million homes in their sample exposed to SLR of between 0 and 6 feet. The most exposed counties are in the gulf region, Washington state, and along the eastern seaboard (Fig. 1, c.f. paper)

Figure 1: Sea Level Exposures by County

Source: Disaster on the Horizon: The Price Effect of Sea Level Rise

For the purpose of their analysis, they restrict their sample to the properties most at risk – those within 0.25 miles of the coast. This allows them to analyse 460,000 sales between 2007 and 2016.

How are Property Prices Affected?

Overall, the team find that coastal properties exposed to SLR sell at a discount of 7%. Breaking the properties down by risk (most

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