As climate change continues to accelerate, it’s bringing about more than just extreme weather patterns. One of the most alarming consequences is the significant impact on real estate values, particularly in some of the nation’s most prized coastal areas. According to CNBC Television’s Diana Olick, climate change is causing home values to plummet dramatically, leaving homeowners and potential buyers grappling with unprecedented challenges. Let’s dissect her findings.
A New Reality for Coastal Homeowners
Coastal regions from Dana Point, California, to Long Island, New York, and Nantucket, Massachusetts, are experiencing severe price drops. These areas, known for their luxurious properties and high market values, are now at the mercy of rising sea levels and coastal erosion. Nantucket real estate agent Shelly Lockwood shared a stark reality: “They are buying them knowing they’re going to lose them.” This sentiment reflects a growing acceptance among buyers that investing in these areas comes with significant risks.
Dramatic Value Declines
One striking example from Nantucket illustrates the gravity of the situation. A home listed for just under $2 million last summer sold for a mere $600,000 this year. The drastic reduction followed a Nor’easter that wiped away 70 feet of the beach it sat on, exacerbated by rising sea levels and unusually high rainfall. The buyer rationalized the purchase by stating, “The price mitigates the risk.”
Extreme Price Drops
Lockwood further emphasized that other homes, which might have sold for $10 to $12 million under normal circumstances, are now selling for $6 to $7 million due to erosion risks. In Montauk, Long Island, heavy storms this winter have led residents to bolster beaches with sandbags to protect their homes. Local resident Kay Tyler noted, “Where we have seen flooding in the past and the water subsiding right away, it’s not subsiding anymore.”
Widespread Financial Implications
The broader financial implications are staggering. On the East Coast alone, there are 33 zip codes where the median home value is at least $1 million. In these areas, approximately 77,000 properties are at significant flood risk, representing roughly $100 billion in potential losses. As attorney Chris Farley, who assists Nantucket residents in reducing their property taxes, points out, the erosion is so severe that some homes have lost 12 to 15 feet of sand in just six months.
Community and Economic Impact
The rapid erosion and rising ocean levels have forced local communities to reconsider their coastal management plans. In Montauk, experts are reassessing plans made a decade ago after Superstorm Sandy, as they have already become outdated due to the accelerating effects of climate change.
A Significant Hit to Local Economies
As home values drop and property taxes are reassessed, local economies could take a significant hit. This scenario could lead to higher taxes for everyone in the affected areas, compounding the financial strain. Residents in Nantucket are voting on which parts of the island need the most help and how to fund these initiatives, highlighting the urgent need for coordinated action.
The Future of Coastal Real Estate
Despite these alarming trends, coastal real estate remains highly desirable. As Diana Olick notes, “People want to still live near the water.” Real estate agents report that wealthier individuals are willing to take the risk, viewing these high-value properties as part of a broader investment portfolio. However, the reality of potentially losing such significant investments underscores the precarious nature of coastal real estate in the era of climate change.
“Uninsurable Soon”
People in the comments shared their thoughts: “The entire state of Florida will soon be uninsurable.”
One commenter added: “Its crazy how when rich people lose stuff everyone has to pay for it but you and me lose we pay for it ourselves”
Another person concluded: “If you want a beach home, fine. Just don’t break the insurance system for those of us who just have one house.”
The Consequences of Our Environmental Crisis
The impact of climate change on coastal real estate values is a sobering reminder of the broader consequences of our environmental crisis. As homeowners and communities grapple with these changes, it is clear that both immediate action and long-term planning are essential to mitigate the risks and adapt to a new reality.
Local Governments’ Response
What do you think? How do you think communities should balance the desire for coastal living with the risks posed by climate change? What measures can homeowners take to protect their properties from the impacts of climate change? How should local governments respond to the declining property values and increased risks in coastal areas?
See the full video on CNBC Television’s YouTube channel for more details here.
