Ah, for a home within earshot of the crashing waves and easy access to the sand and tide pools! Many of us dream of buying property near the water. Since waterfront is limited and desirable, it generally just increases in value. Right?
But many people don’t realize that investing in waterfront property now may lose them money, in much the same way as splurging on an expensive car would: depreciation.
The reason? Rising sea levels are eroding the long-term value of such properties.
“Once impacts become noticeable, they’re going to be upon you quickly,” William V. Sweet, a scientist with the National Oceanic and Atmospheric Administration in Silver Spring, Maryland, told The New York Times. “It’s not a hundred years off — it’s now.”
Sea levels are rising, according to scientists, due to global warming, as rising atmospheric and ocean temperatures melt polar ice caps and glaciers. Even skeptics of the phenomenon may find it difficult to argue with the “sharp jump in this nuisance flooding,” currently impacting the East Coast and Gulf Coast. Expect more flooding in those areas and the West Coast, too, according to The Times report.
So does that mean you will find your oceanfront property literally under water the next time you visit? Not this week or this month, but likely sooner than you’d think. And that means the property you counted on to appreciate in value — perhaps to fund your retirement or leave as a hefty legacy for your children — may be sunk.
In a way, the loss of millions of dollars in property may be the tip of the loss iceberg.
National Geographic reported that even “in the absence of something nasty” — think of an iceberg breaking loose and causing widespread havoc — rising oceans are poised to flood lush oceanfront homes.
“The threat will never go away; it will only worsen. By the end of the century a hundred-year storm surge like [Hurricane] Sandy’s might occur every decade or less,” reported National Geographic. “Using a conservative prediction of a half meter (20 inches) of sea-level rise, the Organisation for Economic Co-operation and Development estimates that by 2070, 150 million people in the world’s large port cities will be at risk from coastal flooding, along with $35 trillion worth of property — an amount that will equal 9 percent of the global GDP.”
Some good news is that these losses are still several years away, so there is time to sell. And demand is still high. Even a few months after Hurricane Sandy hit the East Coast in the fall of 2012, experts told Bloomberg that property values rebounded. And there’s no immediate end in sight to demand for waterfront property.
“A silver lining is that everything will be redone,” real estate agent Nathan Colmer told Bloomberg soon after Hurricane Sandy hit. “The whole area gets rejuvenated.”
Jed Kolko, the chief economist for the real estate website Trulia agreed, telling Bloomberg “the longer-term effect on prices typically from a big disaster is that prices go up because some housing stock is destroyed, but there is still demand among people to live in that area.”
If you’re among those who think you’ll still buy a beachfront home and cash out before there’s a significant financial downturn, check back in with Money Talks News tomorrow for part two on this topic: “5 Key Things to Know If You’re in the Market for Waterfront Property.”
Does the impact of climate change affect your thinking about property investments? Share your thoughts in comments below or on our Facebook page.