As the Southeast continued recovering from Hurricane Helene’s devastation, Hurricane Milton unleashed its fury on the Florida coast. While storms are nothing new to the region, climate change is worsening conditions, raising ocean temperatures and water levels.
This relentless, silent advance is causing the value of luxury waterfront homes and mansions to plummet.
Climate change is blurring the coastline. First Street Foundation’s National Flood Risk Assessment suggests revaluing waterfront properties, with reductions between 5% and 10%. The model predicts that 14.6 million coastal properties are at risk of flooding, and estimates that number will increase by 10% over the next 30 years.
High-value homes have traditionally occupied waterfront locations precisely because of their proximity to the sea. Now, the sea may be their greatest enemy. With the initial impacts of the greenhouse effect on coastlines, the value of these properties has already begun to decline.
A mansion by the sea is no longer a safe investment. According to CNBC, rising sea levels due to global warming have driven down the value of luxury beachfront homes as the risk of storms increases. This has already occurred in places like Dana Point, California, where the ocean has eroded properties along the coast.
Local media outlet Nantucket Current reported on a real estate transaction on Nantucket Island, off the coast of Boston, where a $2.3 million beachfront home sold for just $600,000 due to encroaching waters. “It’s a gamble, but I got comfortable with the risk. It’s a losing battle and I have no certainty around the time that it will eventually—or maybe not—that erosion will take out that house. I looked at it as if I could have that spot for a few years, hopefully a little longer, and do everything I can to make it last, I’ll be happy,” the buyer said.
“Time will tell. The property has some advantages but I don’t have a crystal ball, and who knows what nature will do. We know what the trends are. There are years with no erosion and other years where it’s significant. I’m planning on doing the best I can to hang onto this spot for as long as we can… But there’s nothing you can do to stop erosion,” he added.
Increased losses from weather catastrophes. In addition to flooding and coastal erosion, weather disasters like hurricanes and wildfires are significantly impacting homes in some America’s wealthiest areas, including Florida and California.
This rise in natural disasters is driving insurance premiums higher, with some insurers exiting the market altogether in regions prone to hurricanes or major wildfires. Mark Friedlander, director of corporate communications for the Insurance Information Institute, told Newsweek, “Florida homeowners are already paying the highest insurance premiums in the country. Homeowners in the state paid an average annual premium of $11,163 as of July 2024. The national average premium at this time was $2,435 per year.”
This means that homes on the coast or in high-risk disaster areas won’t only lose value but also face rising annual costs due to higher insurance premiums.
Image | Hugoteconecta
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