While there is a major ongoing battle between climate change believers and non-believers, we know one thing for certain, sea levels are rising. We have seen report after report confirming the impact of climate change although to what degree it will impact real estate in the future has not yet been studied in detail. However, property giant Zillow has looked at real estate data, forecast sea level changes and what impact they could have on US real estate. If we take a look at Maryland in isolation, it is estimated that $19 billion worth of real estate is threatened by rising sea levels between now and the year 2100.
Is this a real threat?
It is easy to dismiss forecasts which may or may not happen by the year 2100, 83 years from now, but when you bear in mind the acquisition of property, passing to your family on death, etc, the potential financial impact is there for all to see. The Zillow review takes in an array of US federal agency reviews into climate change and rising sea levels, where scenarios from 1 foot up to 8 feet have been studied. For the purposes of its own real estate review Zillow has assumed sea levels rising by 6 feet by the year 2100.
Maryland real estate
In this instance we have detailed information regarding which areas of Maryland could be hit by rising sea levels. Statistical data suggest that 61,548 homes are in danger although in this instance “danger” takes in those properties flooded on the ground floor and above. Of the homes identified across Maryland 59% are in the middle/bottom two tiers of the house price groupings with 41% in the higher value echelons. The median value of the properties under threat works out at around $246,000, so now you begin to see the potential damage.
It is also interesting to learn that a 6 foot increase in sea levels does not necessarily mean a 6 foot increase in levels across the US. Some areas will be less than this and some will be more, depending upon the terrain, the ocean and other local factors. The idea that the sea levels will increase in a uniformed manner is just wrong.
Extrapolating this across the US
While it is extremely difficult to forecast with any degree of certainty the future increase in sea levels, if we use the same formula which Zillow used for Maryland, the results are startling. There could be a staggering 1.9 million homes at risk across the US equating to real estate with a current value of $916 billion. It is estimated that 60% of these homes will be in the middle to lower price brackets with 40% in the upper valuation groupings.
These estimates do not take into account an inevitable increase in coastal protection system spending although perhaps they do offer an interesting wake-up call for politicians and investors alike. We know the ocean is a powerful body but to potentially wash away $916 billion worth of real estate, well, that is a totally different ballgame!