Home buyers in Miami are no longer asking how close is a property to the water, but instead how far is it from high tide and whether it is fortified against storm surges. In this story, The New York Times postulates that this is because of climate change. A subsequent column in a competing newspaper, The Wall Street Journal, responded directly to the Times story, arguing that the sudden reluctance to buy waterfront real estate is due to diminishing federal subsidies for flood insurance, which has caused rates to spike drastically. Flood insurance is required by most banks before mortgages will be issued on waterfront properties.
According to the Times, Miami in particular is already facing the effects of climate change. The daily high tide can flood the city's streets, which caused the administration to fund water pump projects to help the streets stay dry. Other cities along the coast are also feeling the effects, and buyers are growing increasingly wary of buying property right on the water - giving up the beautiful views for some peace of mind that the house won't be trashed by a storm.
The result could be an economic disaster worse than the effects of the Great Recession.
In April, Sean Becketti, the chief economist for Freddie Mac, the government-backed mortgage giant, issued a dire prediction. It is only a matter of time, he wrote, before sea level rise and storm surges become so unbearable along the coast that people will leave, ditching their mortgages and potentially triggering another housing meltdown — except this time, it would be unlikely that these housing prices would ever recover.
In the past year, home sales have increased 2.6 percent nationally, but have dropped about 7.6 percent in high-risk flood zones in Miami-Dade County, according to housing data. Many coastal cities are taking steps toward mitigation, digging runoff tunnels, elevating roads and building detention ponds.
James Murley, Miami-Dade’s chief resilience officer, said it was important to avoid spooking the market since real estate investment produces much of the revenue that pays for these upgrades. This balancing act is especially important in Florida because the state and localities rely heavily on property and sales taxes for funding such projects.