Hysterical Headlines (Funny or Absurd) for April 26th – Less desirable waterfront property?
Bottom Line: These are the daily doses of nonsense in the media and my hot takes on them...
Excerpt: New data from Harvard University and the University of Colorado suggests that homes in lower elevations are selling for less and gaining value slower than similar ones at higher elevations. Researchers see that as sign that some buyers are factoring climate risks into their offers and investments — a trend that could have major implications for a state with more coastal real estate at risk than any other.
Miami's real estate professionals, however, are skeptical of the climate ripple effect, pointing out the continued soaring prices of expensive waterfront in places like Miami Beach and Key Biscayne. They say their buyers are more concerned with nearby schools and taxes than whether their property will be underwater in 50 or 100 years.
“I’m not hearing it. My associates aren’t hearing it. My realtors aren’t hearing it. It’s not a huge, deep concern from the public,” said Coral Gables realtor Christopher Zoller. “Yeah people talk about it, but has it prevented them from making a purchase? No.”
And yet, Jesse Keenan, a professor with Harvard's Graduate School of Design, said his recently published paper is the first dollars-and-cents indicator that climate change is already having an impact on the real estate market.
His team reviewed sales of more than 100,000 homes in Miami-Dade County from 1971 to 2017 and found that the lower elevation houses gained value slower than higher elevation homes. That gap grew even wider after 2000, which Keenan said is when sunny day flooding became more frequent in South Florida.
Assistant professor Ryan Lewis and his team reviewed nearly 500,000 houses and condominium sales across the nation from 2007 to 2016 and found that homes vulnerable to sea level rise sell for an average price seven percent lower than similar homes safe from rising seas.
That disparity jumped all the way to 19 percent for properties that would be underwater with a foot of sea rise.
Hot Take: Umm... So, here's a question for you. Is waterfront or near water front property A) Inexpensive B) Expensive? Next up, would you be more inclined to listen to professionals who work locally in the industry every day or the results of researchers thousands of miles away with no experience in the local real-estate market? Digging in slightly on this story, because that's all that's really required – a little research. It's the law of big numbers at work. Simply put, more affordable housing has appreciated at a slightly higher rate than luxury home pricing overtime. What's the most likely reason? The law of big numbers. It's much easier for a home to appreciate from $200,000 to $400,000 than $2 million to $4 million. This appears to be a classic case of drastic overreach to advance a narrative based on research that's rooted with alternate, logical, explanations. When waterfront property becomes less expensive than non-water front property you can get back to me with your Boston and Boulder research.
Until tomorrow...