Rising Sea Levels Hurt Coastal Real Estate Prices
Climate change and rising seas are already negatively impacting coastal real estate prices across the country, according to a new study. In a paper for the Journal of Financial Economics, researchers compared home price information from real estate website, Zillow, with sea level rise data from the National Oceanic and Atmospheric Administration.
The study found that homes exposed to rising seas sell for approximately seven percent less than similar properties that are not at risk of flood damage.
“Even if the properties aren’t going to experience physical damage today, people are going to pay less for them if they expect they will incur damages in the future,” said Matthew Todd Lange Gustafson, an assistant professor of finance at Penn State University and a co-author of the study.
The price discount is mostly led by real estate investors and homeowners looking to purchase a second home, who are generally considered to be more sophisticated investors. However, the trend also extends to first-time homebuyers.
Researchers looked at data from the Yale Climate Opinion Maps and found that in the regions of the U.S. where there are greater numbers of people expressing concerns about climate change, exposed homes that are being sold as primary residences are selling at an 8.5 percent discount overall.
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